The relationship between Graves' disease or its therapy and carcinoma of the thyroid remains uncertain. We studied 20 patients found to have thyroid cancer in glands previously treated for Graves' disease between 1961 and 1986 at the University of Chicago Medical Center. Sixteen (80%) occurred in women and four (20%) occurred in men. The mean age at operation was 37 years (range, 19 to 69 years) and did not differ by sex. Fifteen of the 20 cancers (75%) were papillary while five (25%) were follicular. Six individuals (30%) had a history of external radiation to the head and neck as an infant, child, or young adult. Two others had received radioiodine (RAI) therapy for Graves' disease 1 and 19 years earlier. Patients were divided into three groups: group I: four patients (20%) had a neck mass 4, 14, 20, and 41 years after having had a subtotal thyroidectomy (STT) for Graves' disease; three of four had a history of external irradiation therapy. These tumors behaved aggressively, resulting in the death of two of the four patients. group II: 11 patients (55%) had diffusely enlarge toxic goiters without a nodule. A carcinoma was diagnosed intraoperatively on frozen section in only two of these patients. The others received STT. After recognition on permanent section, those carcinomas that were 4 mm or greater in diameter received postoperative RAI. One recurrence occurred and was treated successfully with further RAI. group III: Five patients (25%) had Graves' disease and a palpable thyroid nodule. None of them had had a prior thyroidectomy for Graves' disease, as in group 1. Thyroid carcinoma was diagnosed in all patients preoperatively or intraoperatively, and a total thyroidectomy was performed. Each patient is alive and well with a mean follow-up of 5 years. Between 1971 and 1981, 194 patients had surgery for Graves' disease, and 10 (5.2%) were found to have an associated carcinoma; six patients (3.1% of the total) did not have a nodule or any other suspicion of malignancy before surgery. During the same time, 303 patients received RAI therapy for Graves' disease and one (0.3%) has subsequently developed thyroid carcinoma. Thyroid cancer associated with Graves' disease is found more commonly in surgically treated patients than in patients after RAI therapy. The greatest risk factor in our patients was previous external radiation to the head and neck. Such individuals should be treated with total thyroid ablation rather than the usual STT, since they are at risk of developing aggressive thyroid cancers if thyroid remnants are left.