Familial cases of congenital hypothyroidism from thyroid dysgenesis (TD) (OMIM 218700) occur with a frequency 15-fold higher than by chance, FOXE1 is one of the candidate genes for this genetic predisposition and contains an alanine tract. Our purpose is to assess the influence of length of the alanine tract of FOXE1 on genetic susceptibility to TD. A case–control association study (based on 115 patients affected by TD and 129 controls genotyped by direct sequencing) and transmission disequilibrium testing (TDT) analyses were performed. The transcriptional activities of FOXE1 constructs containing 14 or 16 alanines were also studied. In the case–control association study, the 16/16 and 16/14 genotypes were inversely associated with TD (OR = 0.39, 95%CI = 0.22–0.68, P = 0.0005), strongly suggesting that the presence of 16 alanines in the tract protect against the occurrence of TD. This association was stronger in the subgroup of patients with ectopic thyroid (OR = 0.28, 95%CI = 0.13–0.58, P = 0.00015). The protection was confirmed by the TDT analysis performed in 39 trios (χ² = 4.3, P = 0.0374). Alternatively, the presence of the 14/14 genotype is associated with an increase risk of TD (OR = 2.59, 95%CI = 1.56–4.62, P = 0.0005). The expression studies showed that the transcriptional activities of FOXE1 with 16 alanines were significantly higher (1.55-fold) than FOXE1 containing 14 alanines (P < 0.003), while the nuclear localisation of the proteins was not affected. We conclude that FOXE1 through its alanine containing stretch modulates significantly the risk of TD occurrence, enhancing a mechanism linking an alanine containing transcription factor to disease.