A. Thyroid dysfunction occurs when the thyroid gland isn't working properly. Located in the lower front part of the neck, the thyroid gland makes hormones that regulate metabolism--chemical processes in the body that affect how we use energy.When the thyroid gland produces too much hormone, it's known as hyperthyroidism or overactive thyroid.. Thyroid dysfunction occurs when the thyroid gland isn't working properly. Located in the lower front part of the neck, the thyroid gland makes hormones that regulate metabolism--chemical processes in the body that affect how we use energy.