We report a case of local squamous cell carcinoma recurrence of thyroid papillary carcinoma, 4 years after subtotal thyroidectomy, in an 82-year-old woman. The papillary cancer of the right thyroid was histopathologically classified as T2a, N0, M0, Ex1; pT2a, pN1b, pEx1; Stage III. Fine-needle aspiration cytology of the recurrent tumor revealed atypical squamous epithelium-like cells with keratinization. The tumor was judged cytologically to be class III, defined as a suspicious malignancy and, after reoperation, it was diagnosed histopathologically as papillary carcinoma recurrence with extensive squamous metaplasia. The recurrent papillary carcinoma was thought to have changed to a squamous cell carcinoma because most of the tumor was occupied by atypical squamous cells, with a small amount of glandular tissue. The primary tumor was histologically diagnosed as a well-differentiated papillary carcinoma at the initial operation. It contained numerous tall neoplastic cells with eosinophilic granules and pseudostratified nuclei, indicating that it could potentially transform into squamous cell carcinoma. We report this case as an example of how squamous cell carcinoma of the thyroid can develop.