A novel hypothesis of thyroid carcinogenesis, the "fetal cell carcinogenesis" hypothesis, in which cancer cells are derived from the remnants of three types of fetal thyroid cells, instead of normal thyroid follicular cells, is proposed. In this hypothesis, thyroid cancer cells are generated from fetal cells by proliferation without differentiation and oncogenes play an oncogenic role by preventing fetal cells from differentiating. This hypothesis explains well the clinical and biological features and recent molecular evidence of thyroid carcinoma. It underscores the importance of clarifying the molecular mechanism of thyroid development and the identification of fetal thyroid cells, especially thyroid stem cells (TSCs), since such data will lead to better understanding of thyroid carcinoma and other thyroid diseases.