Carcinoma extension to adjacent organs is an important prognostic factor in papillary thyroid carcinoma (PTC). However, the biological behavior of PTC with carcinoma extension varies according to the degree of extension. In this study, we investigated whether and how subdivision of PTC extension accurately reflects patients’ prognosis, using a series of 5508 patients with PTC without distant metastasis at presentation, who underwent initial surgery between 1988 and 2004. We classified extension from primary lesions or metastatic nodes into 4 grades based on intraoperative findings (Grade 0-4, Grades 3 and 4 were subdivision of T4a). Prognostic significance for disease-free and cause-specific survivals (DFS and CSS) of extension from primary lesions did not differ from that of extension from metastatic nodes in the same grades except for DFS of Grade 3 patients. DFS of patients became worse with higher grades and CSS was also significantly linked to advanced grades except for Grade 1. On multivariate analysis, Grades 1, 2 and 3 and Grades 2 and 3 were independent prognostic factors for DFS and CSS, respectively, together with other conventional prognostic factors. Taken together, extension from metastatic nodes has a prognostic significance equivalent to that from primary lesions if classified in the same grades. Subdivision of PTC extension corresponding to T4a into two grades can accurately reflect the biological behavior of PTC.