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Autotaxin is a secreted enzyme that converts extracellular lysophosphatidylcholine to lysophosphatidate (LPA). In cancers, LPA increases tumour growth, metastasis and chemoresistance by activating six G-protein coupled receptors. We examined >200 human thyroid biopsies. Autotaxin expression in metastatic deposits and primary carcinomas was four- to tenfold higher than in benign neoplasms or normal thyroid tissue. Autotaxin immunohistochemical staining was also increased in benign neoplasms with leukocytic infiltrations. Malignant tumours were distinguished from benign tumours by high tumour autotaxin, LPA levels and inflammatory mediators including IL1β, IL6, IL8, GMCSF, TNFα, CCL2, CXCL10 and platelet-derived growth factor (PDGF)-AA. We determined the mechanistic explanation for these results and revealed a vicious regulatory cycle in which LPA increased the secretion of 16 inflammatory modulators in papillary thyroid cancer cultures. Conversely, treating cancer cells with ten inflammatory cytokines and chemokines or PDGF-AA and PDGF-BB increased autotaxin secretion. We confirmed that this autotaxin/inflammatory cycle occurs in two SCID mouse models of papillary thyroid cancer by blocking LPA signalling using the autotaxin inhibitor ONO-8430506. This decreased the levels of 16 inflammatory mediators in the tumours and was accompanied by a 50–60% decrease in tumour volume. This resulted from a decreased mitotic index for the cancer cells and decreased levels of vascular endothelial growth factor and angiogenesis in the tumours. Our results demonstrate that the autotaxin/inflammatory cycle is a focal point for driving malignant thyroid tumour progression and possibly treatment resistance. Inhibiting autotaxin activity provides an effective and novel strategy for decreasing the inflammatory phenotype in thyroid carcinomas, which should complement other treatment modalities.