Anaplastic thyroid cancer (ATC) is an aggressive, fatal disease unresponsive to traditional therapies, generating a need to develop effective therapies. The PAX8/PPARγ fusion protein (PPFP) has been shown to favorably modulate tumor growth in follicular thyroid cancer, prompting our evaluation of its efficacy to inhibit ATC cell and tumor growth in vitro and in vivo. PPFP was constitutively expressed in five ATC cell lines: BHT-101, FRO, C-643, KTC-2 and KTC-3, and inhibited cell growth in four of five cell lines and xenograft tumor growth in four of four cell lines. PPFP-mediated growth inhibition involved multiple mechanisms, including upregulation of miR-122 and miR-375, associated with decreased angiogenesis and AKT pathway inactivation, respectively. Also, PPFP expression resulted in marked increase of thyroid-specific marker transcripts, including PAX8, thyroid peroxidase (TPO), sodium iodide symporter (NIS) and thyroglobulin, to varying degrees by activating their respective promoters, suggesting that PPFP induced cellular redifferentiation. Functional studies demonstrate that increased NIS messenger RNA is not associated with increased 125I uptake. However, ectopic expression of wild-type NIS-induced perchlorate-sensitive iodine uptake, suggesting that endogenous NIS in ATC cell lines is defective. As current treatment for ATC is only palliative, overexpression of PPFP may offer a novel therapeutic strategy for the treatment of ATC.