Papillary thyroid carcinoma (PTC) with marked cystic formation (CPTC) is not a subtype of PTC, and its clinical characteristics have not been fully investigated. This study aimed to clarify the clinical and pathological characteristics of CPTC and propose important indicators for its clinical management. 33 CPTC nodules with cystic areas occupying >50% of their volume were examined. Two matched controls (AC) were prepared, one with tumor diameter matched for whole tumor diameter (WTD) of CPTCs (WTD-MC) and the other with tumor diameter matched for solid area diameter (SAD) of CPTCs. The mean age of patients with CPTC was 55.2 years and significantly older than that in SAD-MCs. Of the CPTCs, 69.7% were classified as highly suspicious by ultrasonography, and the prevalence was lower than that in WTD-MCs (88.9%) and SAD-MCs (91.2%). Total thyroidectomy was performed in 69.7% of CPTC cases, which was significantly less frequent than that in WDT-MCs (91.7%), and similar to that in SAD-MCs (76.1%). Histologically, CPTCs exhibited two characteristic findings: invasion from the solid area into the surrounding normal thyroid tissue and granulation tissue around the cystic wall. The frequencies of the cases with pathological lateral node metastasis, extrathyroidal extension, and Ki-67 labeling index ≥5% in CPTCs were significantly lower than those in WTD-MCs and relatively similar with that in SAD-MCs. In the surgical strategy and prognosis of CPTC, the evaluation of tumor size is based on SAD rather than on WTD. We advocate measuring not only WTD but also SAD in CPTC.