Smad proteins are the key effectors of the transforming growth factor β (TGFβ) signaling pathway in mammalian cells. Smad4 plays an important role in human physiology, and its mutations were found with high frequency in wide range of human cancer. In this study, we have functionally characterized Smad4 C324Y mutation, isolated from a nodal metastasis of papillary thyroid carcinoma. We demonstrated that the stable expression of Smad4 C324Y in FRTL-5 cells caused a significant activation of TGFβ signaling, responsible for the acquisition of transformed phenotype and invasive behavior. The coexpression of Smad4 C324Y with Smad4 wild-type determined an increase of homo-oligomerization of Smad4 with receptor-regulated Smads and a lengthening of nuclear localization. FRTL-5 clones overexpressing Smad4 C324Y showed a strong reduction of response to antiproliferative action of TGFβ1, acquired the ability to grow in anchorage-independent conditions, showed a fibroblast-like appearance and a strong reduction of the level of E-cadherin, one crucial event of the epithelial-mesenchymal transition process. The acquisition of a mesenchymal phenotype gave the characteristics of increased cellular motility and a significant reduction in adhesion to substrates such as fibronectin and laminin. Overall, our results demonstrate that the Smad4 C324Y mutation plays an important role in thyroid carcinogenesis and can be considered as a new prognostic and therapeutic target for thyroid cancer.