Activating mutations in the RET proto-oncogene are associated with both familial and sporadic medullary thyroid carcinoma (MTC) development; however, the genetic mechanisms underlying MTC tumorigenesis remain largely unknown. Recently, we have identified somatic inactivating mutations in the cell cycle inhibitor gene P18 in human MTC, which coincided with activating RET mutations, suggesting a role for loss of P18 in combination with oncogenic RET in the multistep process of MTC development. Therefore, we crossed transgenic mice expressing oncogenic RET (RET2B) with mice lacking p18 (and p27, another cell cycle inhibitor) and monitored MTC development. RET2B;p18^+/− mice and RET2B;p18^−/− mice developed MTC with a highly increased incidence compared with their corresponding single mutant littermates. In addition, expression of oncogenic RET causes an earlier age of onset and larger MTCs in p18^−/−;p27^+/− mice. In a subset of MTCs of RET2B;p18^+/−(;p27^+/−) mice, p18^Ink4c expression was completely lost. This loss of p18^Ink4c expression correlated with higher proliferation rates as well as with larger MTCs, indicating that loss of p18 in combination with oncogenic RET not only increases the risk for MTC development but also enhances MTC progression. Our data strongly indicate that oncogenic RET and loss of p18 cooperate in the multistep tumorigenesis of MTC. [Cancer Res 2008;68(5):1329–37]