The incidence of thyroid cancer has increased the past few decades, the most frequent type has been identified to be the papillary thyroid carcinoma (PTC). Following thyroidectomy, radioiodine ablation treatment on PTC is routinely performed. However, many patients do not benefit from radioiodine therapy. Therefore, novel targeted therapies to suppress tumor growth and improve radioiodine uptake are required. La ribonucleoprotein domain family member (LARP)7 is a member of the LARP family and functions as a potential suppressor of the progression of carcinoma. In the present study, the expression status of LARP7 in PTC tissues and cell lines was investigated, and the cell viability, proliferation and apoptotic rate, radioiodine uptake ability of PTC cells with overexpression of LARP7 in vitro was determined. Expression levels of LARP7 were significantly downregulated in PTC tissues and cell lines. Overexpression of LARP7 inhibited the proliferation and increased the radioiodine uptake ability of PTC cells in vitro and inhibited the tumor growth in vivo. Furthermore, LARP7 overexpression inhibited the sonic hedgehog (SHH) signaling pathway and increased sodium/iodide symporter (NIS) expression. However, treatment with recombinant human SHH partially reduced radioiodine uptake ability and NIS expression induced by LARP7. In conclusion, LARP7 may act as a tumor suppressor in PTC by inhibiting the SHH signaling pathway and may be a promising therapeutic target in patients with PTC.