Hypothyroidism accounts about 25% in most of the studies and whether overt, compensated or subclinical hypothyroidism in many studies is not correlated to serum ferritin, frequency of blood transfusion or pre transfusional hemoglobin. The aim of this study is to assess thyroid function tests and urinary iodine level in thalassemia children to detect cases of hypothyroidism and to investigate if iodine deficiency is a contributing factor in hypothyroidism associated with thalassemia. Correction of iodine deficiency if present by iodine supplementation would be more physiological and avoids the administration of L-thyroxine & dose adjustment in an anemic patient with a hyperdynamic circulation and maybe cardiac complications. This cross sectional case control study included sixty patients with thalassemia major on regular blood transfusion therapy, Hyper transfusion regimen and adjusted oral iron chelation recruited from the hematology and endocrinology clinics at El Mounira Pediatric hospital, Cairo university, as well as, thirty-six children taken as a control group. Free T3, T4, serum TSH, serum ferritin and urinary iodine were estimated. The study revealed that 45% of thalassemia patients had overt hypothyroidism with elevated TSH, all had some degree of iodine deficiency, 15% had severe iodine deficiency, 45% had moderate iodine deficiency 40% had mild iodine deficiency. Controls all were euthyroid with a normal urinary iodine level.There is significant correlation between thyroid functions and the level of urinary iodine among the study group indicating that iodine deficiency is a contributing factor in thalassemia associated hypothyroidism. However, there is a positive correlation between the age and TSH level and serum ferritin and TSH level indicating that thyroid function declines with the prolonged burden of thalassemia and iron overload. There is a significant correlation between thyroid functions. We recommend a clinical trial of iodine replacement prior to thyroid hormone replacement therapy at least in cases of mild hypothyroidism with careful monitoring of the thyroid status, in order to test if the thyroid will be able to utilize that iodine and improve its function. In that case mild hypothyroidism could be corrected using iodine supplementation only instead of lifelong L-thyroxine with its problems.