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Increased expression of major histocompatibility complex (MHC) class-I genes and aberrant expression of MHC class-II genes in thyroid epithelial cells (TECs) are associated with autoimmune thyroid diseases. Previous studies have shown that methimazole (MMI) reduces MHC class-I expression and inhibits interferon-γ (IFN-γ or IFNG as listed in the MGI Database)-induced expression of the MHC class-II genes in TECs. The action of MMI on the MHC class-I genes is transcriptional, but its mechanism has not been investigated previously. In the present study, we show that in Fisher rat thyroid cell line 5 cells, the ability of MMI and its novel derivative phenylmethimazole (C10) to decrease MHC class-I promoter activity is similar to TSH/cAMP suppression of MHC class-I and TSH receptor genes, and involves a 39 bp silencer containing a cAMP response element (CRE)-like site. Furthermore, we show that C10 decreases MHC class-I gene expression to a greater extent than MMI and at 10- to 50-fold lower concentrations. C10 also reduces the IFN-γ-induced increase in the expression of MHC class-I and MHC class-II genes more effectively than MMI. Finally, we show that in comparison to MMI, C10 is a better inhibitor of specific protein–DNA complexes that are formed with a CRE-like element on the MHC class-II promoter. These data support the conclusion that the immunosuppressive mechanism by which MMI and C10 inhibit MHC gene expression mimics ‘normal’ hormonal suppression by TSH/cAMP.