How does giving iodine help when there is a nuclear reactor accident?

Dr. Jack Merendino, MD
Endocrinology Diabetes & Metabolism
In the wake of the cataclysmic Japanese earthquake and tsunami on March 11, 2011, the people of Japan are facing a major nuclear disaster with damage to the Fukushima Daiichi reactor complex. We often hear that iodine tablets are part of the emergency response to a nuclear reactor disaster. What does iodine do in this setting?
The main role of iodine in our bodies is in the production of thyroid hormone which contains a large amount of iodine. When you ingest iodine–for example, when you eat shellfish or iodized salt–most of the iodine that stays in your body is concentrated in your thyroid gland. Nearly all of the iodine in the body is in the thyroid gland.
Most forms of iodine do not emit radiation, but there are some variant forms or "isotopes" of iodine that are radioactive. These are used by doctors in various tests, such as a thyroid scan with radioactive iodine uptake (I and others discuss these tests in other Sharecare answers). When used in medical testing, very small amounts of radioactive iodine are given. Larger amounts are given as treatment for some conditions, such as Graves’ disease, where the goal is to destroy thyroid tissue and reduce thyroid overactivity.
In the setting of a nuclear reactor accident, several radioactive materials may be released into the environment, and these include radioactive iodine. If this radioactive iodine gets into our bodies, it will be concentrated in the thyroid gland where it may damage cellular DNA. Long-term, this increases the risk of thyroid cancer. We have seen an increase in the number of thyroid cancer cases among those who were exposed to radiation during the Chernobyl nuclear accident. 
Giving iodine tablets to people who may be exposed in the area of a nuclear reactor accident lessens the risk that a person will accumulate a large amount of radioactive iodine in his or her body. By giving what amounts to a huge amount of iodine by comparison to what one normally takes in, you can "swamp" or dilute the radioactive iodine as a percentage of what will be absorbed. In addition, after getting a large amount of iodine in a short time, the body shuts down iodine absorption for a period of days to weeks in order to prevent overload. (The technical term for this is the "Wolff-Chaikoff effect.") Therefore, giving iodine tablets lessen the increase in thyroid cancer risk that follows exposure after a nuclear accident.