The two most common subtypes of thyroid cancer, follicular thyroid carcinoma (FTC) and papillary thyroid carcinoma, have been extensively studied, but our fundamental understanding of the molecular events in thyroid epithelial oncogenesis is still limited. Unreported data from our previous published global gene expression analysis revealed that the tumor suppressor gene aplysia ras homolog I (ARHI) is frequently underexpressed in FTCs. In this study, we elucidated the frequency and mechanism of ARHI silencing in benign and malignant thyroid neoplasia. We demonstrated that underexpression of ARHI occurs principally in FTCs (P = 0.0018), including its oncocytic variant (11 of 13), even at minimally invasive stage but not classic papillary thyroid carcinoma (two of seven) or follicular adenoma (FA) (three of 14). FTCs show strong allelic imbalance with reduction in copy number/loss of heterozygosity (LOH) in 69%, compared with less than 10% for FAs. In combination with our LOH data, bisulfite sequencing in a subset of samples revealed that FA displays a symmetric methylation pattern, likely representing one unmethylated allele and one presumptively imprinted allele, whereas FTC shows a virtually complete methylation pattern, representing LOH of the nonimprinted allele with only the hypermethylated allele remaining. Furthermore, we showed that pharmacologic inhibition of histone deacetylation but not demethylation could reactivate ARHI expression in the FTC133 FTC cell line. Therefore, our data suggest that silencing of the putative maternally imprinted tumor suppressor gene ARHI, primarily by large genomic deletion in conjunction with hypermethylation of the genomically imprinted allele, serves as a key early event in follicular thyroid carcinogenesis.