© 2018 American Association for Cancer Research. Purpose: The BRAFV600E oncogene modulates the papillary thyroid carcinoma (PTC) microenvironment, in which pericytes are critical regulators of tyrosine-kinase (TK)-dependent signaling pathways. Although BRAFV600E and TK inhibitors are available, their efficacy as bimodal therapeutic agents in BRAFV600E-PTC is still unknown. Experimental Design: We assessed the effects of vemurafenib (BRAFV600E inhibitor) and sorafenib (TKI) as single agents or in combination in BRAFWT/V600E-PTC and BRAFWT/WT cells using cell-autonomous, pericyte coculture, and an orthotopic mouse model. We also used BRAFWT/V600E-PTC and BRAFWT/WT-PTC clinical samples to identify differentially expressed genes fundamental to tumor microenvironment. Results: Combined therapy blocks tumor cell proliferation, increases cell death, and decreases motility via BRAFV600E inhibition in thyroid tumor cells in vitro. Vemurafenib produces cytostatic effects in orthotopic tumors, whereas combined therapy (likely reflecting sorafenib activity) generates biological fluctuations with tumor inhibition alternating with tumor growth. We demonstrate that pericytes secrete TSP-1 and TGFb1, and induce the rebound of pERK1/2, pAKT and pSMAD3 levels to overcome the inhibitory effects of the targeted therapy in PTC cells. This leads to increased BRAFV600E-PTC cell survival and cell death refractoriness. We find that BRAFWT/V600E-PTC clinical samples are enriched in pericytes, and TSP1 and TGFb1 expression evoke gene-regulatory networks and pathways (TGFb signaling, metastasis, tumor growth, tumor microenvironment/ECM remodeling functions, inflammation, VEGF ligand–VEGF receptor interactions, immune modulation, etc.) in the microenvironment essential for BRAFWT/V600E-PTC cell survival. Critically, antagonism of the TSP-1/TGFb1 axis reduces tumor cell growth and overcomes drug resistance. Conclusions: Pericytes shield BRAFV600E-PTC cells from targeted therapy via TSP-1 and TGFb1, suggesting this axis as a new therapeutic target for overcoming resistance to BRAFV600E and TK inhibitors.