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Papillary thyroid carcinoma (PTC), the most frequent thyroid cancer, is characterized by low proliferation but no apoptosis, presenting frequent lymph-node metastasis. Papillary thyroid carcinoma overexpress transforming growth factor-beta (TGF-β). In human cells, TGF-β has two opposing actions: antitumoral through pro-apoptotic and cytostatic activities, and pro-tumoral promoting growth and metastasis. The switch converting TGF-β from a tumor-suppressor to tumor-promoter has not been identified. In the current study, we have quantified a parallel upregulation of TGF-β and nuclear p27, a CDK2 inhibitor, in samples from PTC. We established primary cultures from follicular epithelium in human homeostatic conditions (h7H medium). TGF-β-dependent cytostasis occurred in normal and cancer cells through p15/CDKN2B induction. However, TGF-β induced apoptosis in normal and benign but not in carcinoma cultures. In normal thyroid cells, TGF-β/SMAD repressed the p27/CDKN1B gene, activating CDK2-dependent SMAD3 phosphorylation to induce p50 NFκB-dependent BAX upregulation and apoptosis. In thyroid cancer cells, oncogene activation prevented TGF-β/SMAD-dependent p27 repression, and CDK2/SMAD3 phosphorylation, leading to p65 NFκB upregulation which repressed BAX, induced cyclin D1 and promoted TGF-β-dependent growth. In PTC samples from patients, upregulation of TGF-β, p27, p65 and cyclin D1 mRNA were significantly correlated, while the expression of the isoform BAX-β, exclusively transcribed in apoptotic cells, was negatively correlated. Additionally, combined ERK and p65 NFκB inhibitors reduced p27 expression and potentiated apoptosis in thyroid cancer cells while not affecting survival in normal thyroid cells. Our results therefore suggest that the oncoprotein p27 reorganizes the effects of TGF-β in thyroid cancer, explaining the slow proliferation but lack of apoptosis and metastatic behavior of PTC.