This study was designed to examine the involvement of PATZ1 in carcinogenesis and dedifferentiation of thyroid cancer. Immunohistochemistry on clinical specimens indicated nuclear PATZ1 expression in all normal thyroid glands and adenomatous goiter, while nuclear PATZ1 expression decreased along with the dedifferentiation of thyroid cancer. Knockdown of nuclear PATZ1 by siRNA in an immortalized normal follicular epithelial cell line (Nthy-ori 3-1) altered cellular morphology and significantly increased cell proliferation, migration, and invasion. In addition, the expression of urokinase-type plasminogen activator (uPA), matrix metalloproteinase (MMP) 2, MMP9, and MMP11 was increased by PATZ1 knockdown in Nthy-ori 3-1 cells. When PATZ1 was silenced in differentiated thyroid cancer (DTC) cell lines (TPC-1 and FTC-133), proliferation, cellular motility, and expression of uPA and MMPs were significantly increased. Forced expression of exogenous PATZ1 decreased proliferation, cellular motility, and the expression of uPA and MMPs in ATC cell lines (ACT-1 and FRO). In thyroid cancer cell lines, PATZ1 functioned as a tumor suppressor regardless of p53 status. Moreover, the ratio of nuclear PATZ1 positive tumors was significantly decreased in ATC irrespective of p53 status. Our study demonstrates that PATZ1 knockdown enhances malignant phenotype both in thyroid follicular epithelial cells and thyroid cancer cells, suggesting that PATZ1 functions as a tumor suppressor in thyroid follicular epithelial cells and is involved in the dedifferentiation of thyroid cancer.