Papillary thyroid cancer (PTC) is one of the most common endocrine malignancies associated with significant morbidity and mortality. Although multiple studies have contributed to a better understanding of the genetic alterations underlying this frequently arising disease, the downstream molecular effectors that impact PTC pathogenesis remain to be further defined. Here, we report that the regulator of cell fate specification, PROX1, becomes inactivated in PTC through mRNA downregulation and cytoplasmic mislocalization. Expression studies in clinical specimens revealed that aberrantly activated NOTCH signaling promoted PROX1 downregulation and that cytoplasmic mislocalization significantly altered PROX1 protein stability. Importantly, restoration of PROX1 activity in thyroid carcinoma cells revealed that PROX1 not only enhanced Wnt/β-catenin signaling, but also regulated several genes known to be associated with PTC, including thyroid cancer protein (TC)-1, SERPINA1, and FABP4. Furthermore, PROX1 re-expression suppressed the malignant phenotypes of thyroid carcinoma cells, such as proliferation, motility, adhesion, invasion, anchorage-independent growth, and polyploidy. Moreover, animal xenograft studies demonstrated that restoration of PROX1 severely impeded tumor formation and suppressed the invasiveness and the nuclear/cytoplasmic ratio of PTC cells. Taken together, our findings demonstrate that NOTCH-induced PROX1 inactivation significantly promotes the malignant behavior of thyroid carcinoma, and suggest that PROX1 reactivation may represent a potential therapeutic strategy to attenuate disease progression