The role of thyroid hormone metabolism in clinical outcomes of the critically ill remains unclear. Using preclinical models of acute lung injury (ALI), we assessed the gene and protein expression of type 2 deiodinase (DIO2), a key driver for synthesis of biologically active triiodothyronine, and addressed potential association of DIO2 genetic variants with ALI in a multiethnic cohort. DIO2 gene and protein expression levels in murine lung were validated by microarrays and immunoblotting. Lung injury was assessed by levels of bronchoalveolar lavage protein and leukocytes. Single-nucleotide polymorphisms were genotyped and ALI susceptibility association assessed. Significant increases in both DIO2 gene and D2 protein expression were observed in lung tissues from murine ALI models (LPS- and ventilator-induced lung injury), with expression directly increasing with the extent of lung injury. Mice with reduced levels of DIO2 expression (by silencing RNA) demonstrated reduced thyroxine levels in plasma and increased lung injury (increased bronchoalveolar lavage protein and leukocytes), suggesting a protective role for DIO2 in ALI. The G (Ala) allele of the Thr92Ala coding single-nucleotide polymorphism (rs225014) was protective in severe sepsis and severe sepsis–associated ALI after adjustments for age, sex, and genetic ancestry in a logistic regression model in European Americans. Our studies indicate that DIO2 is a novel ALI candidate gene, the nonsynonymous Thr92Ala coding variant of which confers ALI protection. Increased DIO2 expression may dampen the ALI inflammatory response, thereby strengthening the premise that thyroid hormone metabolism is intimately linked to the integrated response to inflammatory injury in critically ill patients.