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<b><i>Background:</i></b> Active surveillance has been proposed as an appropriate management strategy for low-risk differentiated thyroid cancer (DTC), due to the typically favorable prognosis of this condition. This systematic review examines the benefits and harms of active surveillance vs. immediate surgery for DTC, to inform the updated American Thyroid Association guidelines. <b><i>Methods:</i></b> A search on Ovid MEDLINE, Embase, and Cochrane Central was conducted in July 2021 for studies on active surveillance vs. immediate surgery. Studies of surgery vs. no surgery for DTC were assessed separately to evaluate relevance to active surveillance. Quality assessment was performed, and evidence was synthesized narratively. <b><i>Results:</i></b> Seven studies (five cohort studies [<i>N</i> = 5432] and two cross-sectional studies [<i>N</i> = 538]) of active surveillance vs. immediate surgery, and seven uncontrolled treatment series of active surveillance (<i>N</i> = 1219) were included. One cross-sectional study was rated fair quality, and the remainder were rated poor quality. In patients with low risk (primarily papillary), small (primarily ≤1 cm) DTC, active surveillance, and immediate surgery were associated with similar, low risk of all-cause or cancer-specific mortality, distant metastasis, and recurrence after surgery. Uncontrolled treatment series reported no cases of mortality in low-risk DTC managed with active surveillance. Among patients managed with active surveillance, rates of tumor growth were low; rates of subsequent surgery varied and primarily occurred due to patient preference rather than tumor progression. Four cohort studies (<i>N</i> = 88,654) found that surgery associated with improved all-cause or thyroid cancer mortality compared with nonsurgical management, but findings were potentially influenced by patient age and tumor risk category and highly susceptible to confounding by indication; eligibility for, and receipt of, active surveillance; and timing of surgery was unclear. <b><i>Conclusions:</i></b> In patients with small low-risk (primarily papillary) DTC, active surveillance and immediate surgery may be associated with similar mortality, risk of recurrence, and other outcomes, but methodological limitations preclude strong conclusions. Studies of no surgery vs. surgery are difficult to interpret due to clinical heterogeneity and potential confounding factors and are unsuitable for assessing the utility of active surveillance. Research is needed to clarify the benefits and harms of active surveillance and determine outcomes in nonpapillary DTC, larger (>1 cm) cancers, and older patients.