The hyt/hyt mouse is hypothyroid because of a mutation in the TSH receptor (TSH-R). In this report, we confirm the presence of a Pro to Leu mutation in amino acid 556 of the fourth transmembrane domain (TM4) of the TSH-R. This Pro is highly conserved in members of the G protein-coupled seven-transmembrane family of receptors. Insertion of this mutation into the wild-type rat receptor eliminated TSH binding and receptor function in transfected 293 and COS cells. Wild-type TSH-R conferred a 7.4-fold increase in cAMP and a 2.3-fold stimulation of a cAMP-responsive reporter gene. The P556L mutant receptor elicited no increase in cAMP or the reporter gene. Cells transfected with wild-type receptor bound TSH with a Kd of 3.3 x 10(-10) M, whereas no TSH binding was detected with the P556L mutant. Because the P556L mutation occurs in a receptor region (TM4) that is not expected to alter the binding of TSH, additional studies were performed to examine receptor processing and cellular localization. Mutant receptors from solubilized membranes also failed to bind TSH, indicating that the absence of binding to intact cells was not accounted for intracellular trapping of the mutant receptor. Western blot analyses demonstrated that the mutant and wild-type receptors were processed through a similar series of precursors and that a mature 95-kilodalton form of the mutant TSH-R was produced, consistent with its insertion into the plasma membrane. Immunofluorescence studies confirmed expression of the P556L mutant on the cell surface of transfected cells and in thyroid tissue from hyt/hyt mice. Although the extracellular domain of the TSH-R is sufficient for high affinity binding of TSH, we conclude that the hyt mutation in the fourth transmembrane domain eliminates TSH binding. These results suggest interactions between the extracellular and transmembrane domains of the TSH-R and indicate that this highly conserved proline is required for normal receptor structure and function.