BACKGROUND The management of cytologically benign thyroid cysts is controversial. Treatment options include observation, chemical sclerosis, and surgery. This study was undertaken to determine the incidence of carcinoma in cytologically benign thyroid cysts that recur after complete aspiration and to determine the indications for surgery in these patients. METHODS The medical records of 1189 consecutive patients undergoing thyroid surgery between July 1995 and November 2000 were reviewed. In 34 patients the indication for surgery was a thyroid cyst with benign cytologic findings that refilled at least once after complete aspiration. These patients were selected for further study. RESULTS The 26 women and 8 men had a median age of 42 years. Fine-needle aspiration cytology was consistent with a benign cyst in all these cases. Final pathologic findings revealed the nodule to be a papillary carcinoma in 4 patients (12%). In another 4 patients (12%) an incidental microscopic papillary carcinoma, separate from the cyst, was identified on final pathologic findings. In all 4 patients with papillary carcinoma the cyst size was greater than 3 cm (range, 3.4 to 5.0 cm). CONCLUSIONS The incidence of malignancy in cytologically benign thyroid cysts that recur after aspiration is high enough to warrant surgical excision, especially if the cyst is greater than 3 cm in size.