In iodine rich areas the incidence of papillary carcinoma of the thyroid is extremely high but its prognosis is favorable. When papillary carcinoma is confined to one lobe, our standard surgical procedure has been total lobectomy with isthmusectomy rather than total thyroidectomy. Our followup study of 185 such patients reveals considerable difference in the outcome between the 85 patients with gross thyroid capsular invasion and the 100 patients without, regardless of the presence of cervical lymph node metastasis. In the latter group, the tumor could be completely resected in all patients; although 4 cases had recurrence and required reoperation, 3 patients are alive and well and one died of other disease. In contrast, 20 patients in the former group had incomplete resection of the tumor, 4 patients developed recurrence and needed to be reoperated and 7 patients eventually died of thyroid cancer. One hundred thirty three patients (71.9%) underwent modified neck dissection at the time of surgery to find lymph node metastasis in 37 of 59 cases (62.7%) without gross thyroid capsular invasion and 64 of 74 cases (86.5%) with such invasion. The difference is statistically significant (P < 0.05). From these results we conclude that for papillary thyroid cancer in iodine rich areas total lobectomy with isthmusectomy is the treatment of choice when gross thyroid capsular invasion is not recognized on the operation table. However, when gross thyroid capsular invasion is recognized, total or near total thyroidectomy has to be performed.