Thyroid hormones (THs) are important in the development and maturation of the central nervous system (CNS). The significant actions of THs during CNS development occur at the time when TH levels are lower than those in the mother and the hypothalamic-thyroid (HPT) axis is not fully functional. In the developing rat nervous system, primarily the cerebellum, the first three postnatal weeks represent a period of significant sensitivity to thyroid hormones. This study presents a spontaneous, inherited recessive hypothyroidism in Sprague-Dawley rats with devastating functional consequences to the development of the CNS. The clinical signs develop around 14 day's postnatal (dpn) and are characterized by ataxia, spasticity, weight loss and hypercholesterolemia. The afflicted rats died at 30 days due to severe neurological deficits. The deterioration affects the entire CNS and is characterized by progressive neuronal morphological and biochemical changes, demyelination and astrogliosis. The cerebellum, brain stem, neocortex, hippocampus and adrenal gland medulla appear to be most affected. Thyroid Stimulating Hormone (TSH), T3 and T4 levels were significantly lower in hypothyroid rats than control. Immunohistochemistry and RT-PCR demonstrated a reduction of Thyrotropin Releasing Hormone (TRH) in the hypothalamus of hypothyroid rats. The weight of both thyroid and pituitary glands were significantly less in hypothyroid rats than the corresponding normal littermate controls. Transmission electron microscopy demonstrates consistent postsynaptic dendritic, synaptic and spine alterative changes in the brain of hypothyroid rats. These data suggest that we discovered a tertiary form of inherited hypothyroidism involving the hypothalamus.