Congenital hypothyroidism is the most prevalent endocrine disorder in the newborn and affects 1 in 3,000–4,000 newborns. Screening for congenital hypothyroidism is a major achievement of paediatrics because early diagnosis and treatment have resulted in normal development in nearly all cases. The cause of congenital hypothyroidism in the majority of newborns is unknown. However, in some patients the molecular basis of their congenital hypothyroidism has recently been clarified. In patients with congenital hypothyroidism and a normally developed thyroid gland, the autosomal recessive inheritance of loss-of-function mutations of genes encoding for the thyroid peroxidase gene, the sodium-iodide symporter gene and the pendrin gene have been identified. The autosomal recessive inheritance of loss-of-function mutations of the thyroid stimulating hormone (TSH) receptor as well as the dominant inheritance of mutations encoding for transcription factors have been identified in patients with defective thyroid development. Furthermore, it has become evident that in some patients with persistent mental retardation and neurological symptoms, defects of the transcription factor NKX2.1, which is expressed in the thyroid gland as well as in the CNS during embryonic development, cause both defective thyroid and CNS development resulting in persistent neurological and mental defects despite early diagnosis and treatment. Central hypothyroidism is a rare disease with an estimated frequency of not more than 1 in 50,000 newborns. Central hypothyroidism can be due to recessive inheritance of loss-of-function mutations of the TSH-β gene and to developmental defects of the hypothalamus or pituitary. In contrast to the previous assumption that isolated TSH deficiency will not lead to impaired mental development, identification of the molecular defects in central hypothyroidism has clearly demonstrated that some of these patients will have impaired mental development. Clarification of the molecular defects of thyroid development will help to explain the differences in outcome in patients with congenital hypothyroidism and to develop new diagnostic and therapeutic strategies to ensure adequate counselling and care for these patients.