Thyroglossal cyst (TGC) is the most common congenital anomaly of the thyroid gland and is found in approximately 7% of general population. It represents cystic degeneration of a remnant of the thyroglossal duct that failed to involute during gestation. Malignancy occurring in TGC is rare entity, accounting only for 1% of all thyroglossal cysts. We are presenting such a rare case of papillary thyroid carcinoma arising in a thyroglossal cyst. 30-year-old female presented with a painless, gradually progressive swelling below the chin extending to left side. On examination, swelling was noted in submental region and measuring 4 × 3 × 1 cm, firm in consistency and moves with deglutition and movement of tongue. On radiological investigations, lobulated cystic lesion in midline with thin septations was seen, suggestive of thyroglossal cyst. The thyroid of the patient was normal. Patient underwent Sistrunk procedure. On histopathology, papillary thyroid carcinoma in thyroglossal cyst was seen and it was invading cyst wall and superficial skeletal muscle. The 1st case of thyroglossal duct carcinoma was reported by Brentano in 1911. Till now 300 cases have been reported in literature. Carcinomas occurring in thyroglossal cyst are extremely rare, (< 1% cases). The most frequent histological type is papillary pattern followed by mixed(papillary and follicular), squamous cell, Hürthle cell, follicular and anaplastic variety. The etiology of thyroglossal duct carcinoma is unknown and neither good clinical history nor examination can lead to a preoperative diagnosis. Diagnosis is often incidental on histopathology as in present case. Thyroglossal duct carcinoma is a rare condition that comes as a surprise to both the patient and surgeon and should be considered in patients presenting with cystic midline neck masses.