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Papillary thyroid carcinoma (PTC) is the most common form of thyroid cancer and while it has a generally good prognosis, tumor recurrence remains a major clinical challenge. Studying laboratory cell lines as well as clinical specimens indicate that PTC may follow the cancer stem cell (CSC) model. However, CSC characteristics relevant in PTC initiation and progression remain largely unknown. Here we studied a population of sphere-growing tumor cells isolated from primary cultures of clinical PTC. These sphere-growing cells consisted of aldehyde dehydrogenase positive (ALDH+) and ALDH negative (ALDH-) cell subpopulations and demonstrated a hierarchical pattern of cell division. Using combinations of selective depletion, specific inhibition and cell sorting, we found that both subpopulations of the sphere cells were able to self-renew and initiate xenograft tumors independently, and fulfilled the definition of CSC. Importantly, when the subpopulations functioned together, the cancer-initiation efficiency and the xenograft tumor progression were significantly enhanced compared to either subpopulation alone. These data revealed crucial roles of ALDH- CSC in PTC biology and suggested that CSC subpopulations function cooperatively to control PTC initiation and progression. Together, our study indicates that CSC subpopulations isolated from clinical specimens offer unprecedented opportunities for investigating PTC pathogenesis and developing effective therapies.