Secreted Protein Acidic and Rich in Cysteine (SPARC)-related modular calcium-binding protein-2 (SMOC2), a secreted matricellular protein, is reported to be involved in various processes related to cancer progression such as regulating the cell cycle, angiogenesis, and invasion. However, its expression and prognostic significance in papillary thyroid carcinomas (PTCs) remains unknown. Using immunohistochemistry, we evaluated the expression profile of SMOC2 and its prognostic value in a large cohort of PTCs. Real time-PCR analysis with fresh-frozen tissues showed that SMOC2 mRNA expression in PTCs was substantially lower than the expression in matched non-cancerous thyroid tissues, consistent with the results from thyroid cancer cell lines. Immunohistochemical analysis demonstrated that SMOC2 was normally present in thyroid follicular epithelial cells and the expression level was maintained in nodular hyperplasia. However, SMOC2 expression was significantly lower in lymphocytic thyroiditis and follicular tumors including follicular adenomas and carcinomas. In particular, 38% of PTCs exhibited a complete loss of SMOC2 expression, which was associated with the presence of BRAF (V600E) mutation. Moreover, SMOC2 further declined during lymph node metastasis in PTCs. DNA methylation chip analysis revealed one hypermethylated CpG site in the promoter region of SMOC2 gene, suggesting an epigenetic regulation of SMOC2 in PTCs. Remarkably SMOC2 positivity was associated with improved recurrence-free survival along with female sex, tumor size, and the N stage. However, SMOC2 was not identified as an independent prognostic marker in multivariate analyses. Taken together, SMOC2 expression is significantly down-regulated in PTCs and SMOC2 positivity is closely associated with better clinical outcomes, suggesting that SMOC2 can be a prognostic marker in PTC patients.