Border disease (BD) was induced in lambs by inoculation of their dams at 50 days gestation with Border disease virus (BDV) isolate #31. At birth, the clinically affected lambs had diffuse spinal cord hypomyelination, confirmed by immunocytochemical staining for myelin-associated glycoprotein and myelin basic protein. In the BD lambs, large numbers of thyroid follicular epithelial cells and scattered pituitary cells contained BDV antigen by immunofluorescence staining. Double labeling techniques demonstrated the BDV-infected pituitary cells to contain growth hormone, adrenocorticotrophic hormone, prolactin, or luteinizing hormone. Cells containing thyroid stimulating hormone were rare and were not positive for BDV antigen. Infection of the pituitaries and thyroid glands caused no detectable morphologic changes as compared to controls. The BD lambs had statistically significantly (p less than 0.05) lower mean serum concentrations of thyroxine and L-3,3',5-triiodothyronine as compared to age-matched uninfected controls. Similar significant differences in the mean plasma levels of growth hormone and thyroid stimulating hormone were not found. In addition, the BD lambs had a statistically significant (p less than 0.05) lower mean activity of the myelin-associated, thyroid hormone dependent enzyme, 2',3'-cyclic nucleotide-3'-phosphodiesterase in spinal cord tissue. Although not conclusive, these results indicate that the hypomyelination in BD may be due to depressed levels of circulating thyroid gland hormones secondary to a noninflammatory and noncytolytic infection of the thyroid gland by BDV. This is one of the first reports indicating that a virus-induced hormonal alteration may cause a congenital lesion in animals.