The genetic alterations currently identified in papillary thyroid microcarcinomas (PTMCs) are insufficient for distinguishing tumors with aggressive features. We aimed to identify candidate markers associated with lateral lymph node metastasis (LLNM, N1sb disease) in patients with PTMC using transcriptomic analysis. RNA sequencing was performed on 26 matched tumor and normal thyroid tissue samples (N0, n = 14; N1b, n = 12), followed by functional enrichment analyses of differentially expressed genes (DEGs). EcoTyper was used to explore the distinct tumor microenvironment (TME). We identified 631 DEGs (213 upregulated and 418 downregulated) between N1b and N0 PTMCs. The most significantly upregulated genes in N1b were associated with tumorigenesis, adhesion, migration, and invasion. DEGs were mainly enriched in the pathways of idiopathic pulmonary fibrosis, TME, wound healing, and inhibition of matrix metalloproteases. We predicted the activation of these pathways in N1b PTMCs. N1b PTMCs had a unique TME with abundant fibroblasts and epithelial cells, associated with an increased risk of disease progression. Fibroblast marker genes, including POSTN, MMP11, TNFAIP6,and FN1, and epithelial cell marker genes, including NOX4, MFAP2, TGFVBI,and TNC, were selected. POSTN and FN1, fibroblast cell-specific genes, and NOX4 and TNC, epithelial cell-specific genes, were promising biomarkers for predicting LLNM development and recurrence in patients with PTMC. We delineated the cellular ecotypes within the TME of patients with N1b PTMC and revealed potential markers for predicting LLNM and the prognosis of PTMC. These findings provide valuable insights into the contributions of cancer-associated fibroblasts and epithelial cells to PTMC progression and metastasis.