The most damaging effect of iodine deficiency is on the developing brain. Thyroid hormone is particularly important for myelination of the central nervous system, which is most active in the perinatal period and during fetal and early postnatal development. Numerous population studies have correlated an iodine-deficient diet with increased incidence of mental retardation. A meta-analysis of 18 studies concluded that iodine deficiency alone lowered mean IQ scores by 13.5 points (Bleichrodt and Born, 1994).

The effects of iodine deficiency on brain development are similar to those of hypothyroidism from any other cause. The United States, Canada, and most developed countries have routine screening of all neonates by blood spot for TSH or T₄ to detect among iodine-sufficient children the approximately one in 4,000 who will be hypothyroid, usually from thyroid aplasia. Iodine treatment can reverse cretinism especially when the treatment is begun early (Klein et al., 1972).

Cretinism is an extreme form of neurological damage from fetal hypothyroidism. It occurs in severe iodine deficiency and is characterized by gross mental retardation along with varying degrees of short stature, deaf mutism, and spasticity. As many as one in ten of some populations with very severe iodine deficiency may be cretins. Correction of iodine deficiency in Switzerland completely eliminated the appearance of new cases of cretinism, and a similar experience has occurred in other countries (Stanbury et al., 1998).