To determine the prevalence of permanent and transient congenital hypothyroidism (CH) in Isfahan, Iran. In 256 primarily diagnosed CH patients identified through the neonatal screening programme from May 2002 to February 2005, treatment was discontinued for 4 weeks and T4 and thyroid stimulating hormone (TSH) were measured. Permanent or transient CH was determined from the results of the thyroid function tests and the radiologic findings. Patients with TSH levels >6 (mIU/l) were diagnosed with permanent CH. Results were available from 204 patients, of whom 122 patients were diagnosed with permanent CH (59.8%) (prevalence 1:748 births), and 82 with transient hypothyroidism (prevalence 1:1114). Permanent CH was associated with higher initial TSH levels than transient hypothyroidism (P < 0.05). The most common aetiology of CH was dyshormonogenesis. The rates of both permanent and transient CH in our study were higher than the comparable worldwide rates. The transient group had low T4 levels, suggesting that iodine contamination should be investigated. The aetiology of CH was also different from that recorded in many other studies.