Epidemiological studies have revealed a significantly higher incidence of toxic adenoma (TA) and toxic multi-nodular goitre (TMNG) in regions of iodine deficiency. Fifty to eighty percent of TA and TMNG are caused by activation of the cAMP pathway, mostly by mutations in the thyrotrophin receptor (TSHR). We aimed to investigate whether iodide could modulate the biological effects of activating TSHR mutations. We have applied an in vitro model of TA comprising FRTL-5 cells stably expressing activating TSHR. We have mimicked the in vivo situation by examining the effects of prolonged exposure to iodide on the proliferation and signal transduction etc. of these cells. We observed an iodide-induced 'inhibition of proliferation' which was significant from 10 mM in the presence of serum but from 1 mM in its absence. The inhibition of proliferation was significantly higher in the activating mutant expressing FRTL-5 compared with control Neo or wild-type TSHR, indicating that the effect was mediated via the cAMP cascade. The effect was neither due to hyper-tonicity nor was it the result of an increase in cell death either by apoptosis or necrosis. Prolonged exposure to iodide produces an increase in cells in the G2 and post-G2 phases, indicating that G2/M blockade contributes to the mechanism of inhibition. The mutant expressing FRTL-5 cells have increased proliferation when chronically exposed to TSH, and this is associated with a reduction in phosphorylated (p) CREB levels. This contrasts with the effect of iodide in which inhibition of proliferation is accompanied by an increase in pCREB. In conclusion, our studies indicate that the biological effects of activating TSHR mutations vary with the ambient iodide supply and could be masked in regions of high iodine intake.