Papillary carcinoma of the thyroid is a common malignancy originating from the endocrine organs. The recent prevalence of ultrasonography (US) and US-guided fine needle aspiration biopsy (FNAB) can make us easily diagnose papillary carcinoma of 1.0 cm or less in maximal diameter, which is called papillary microcarcinoma. How to treat papillary microcarcinoma has been controversial. In autopsy studies, papillary carcinoma of 3-9.9 mm is frequently found as an occult carcinoma. Furthermore, papillary carcinoma of more than 3 mm was detected in 3.5% of otherwise healthy women aged 30 years or older by mass screening using US and FNAB, and 84% of them were less than 1.5 cm in diameter. These findings indicate that papillary microcarcinoma frequently remains occult. Thus, recently, a trial of observation without surgical treatment has been performed, which demonstrates that most papillary microcarcinoma do not grow or only slowly grow and observation can be a therapeutic strategy. On the other hand, previous reports demonstrated that papillary microcarcinoma frequently metastasizes to cervical lymph nodes and shows multiple tumor formation in the thyroid. Furthermore, cases with palpable nodal metastasis often show rapid progression and dire prognosis. In this review, we discuss the appropriate application of observation and surgical treatment of papillary microcarcinoma.