**Core Concept**
The regulation of thyroid hormone levels in the body involves the conversion of thyroxine (T4) to triiodothyronine (T3) by deiodinases, enzymes that catalyze the removal of iodine from the outer ring of the iodothyronine molecule. The 5'–deiodinase enzyme, specifically type 1 and type 2, plays a crucial role in the peripheral conversion of T4 to T3 in various tissues, including the liver, kidney, and brain.

**Why the Correct Answer is Right**
Propylthiouracil (PTU) is a medication used in the treatment of hyperthyroidism, which inhibits the peripheral conversion of T4 to T3 by inhibiting 5'–deiodinase enzymes, thereby reducing the production of active T3 hormone. This action is particularly beneficial in conditions where excessive T3 production is contributing to the pathophysiology, such as in Graves' disease. PTU also inhibits the synthesis of thyroid hormones by blocking the enzyme thyroperoxidase, which is involved in the coupling of iodinated tyrosine residues to form T3 and T4.

**Why Each Wrong Option is Incorrect**
**Option A:** Methimazole does not inhibit 5'–deiodinase; instead, it blocks the synthesis of thyroid hormones by inhibiting the enzyme thyroperoxidase, similar to PTU, but through a different mechanism.
**Option B:** Iodine does not inhibit 5'–deiodinase; it is actually a substrate for the enzyme and is involved in the synthesis of thyroid hormones.
**Option C:** Levothyroxine (T4) is the substrate for 5'–deiodinase, not an inhibitor of the enzyme.

**Clinical Pearl / High-Yield Fact**
PTU is often used in the treatment of hyperthyroidism, particularly in pregnant women, due to its ability to inhibit the peripheral conversion of T4 to T3, which can help reduce the risk of fetal thyroid dysfunction.

**Correct Answer: C. Levothyroxine (T4) is the substrate for 5'–deiodinase, not an inhibitor of the enzyme.