Objective Current guidelines recommend against routine ultrasound (US) guided fine-needle aspiration biopsy (FNAB) of small (<1 cm) thyroid nodules and suggest follow-up of >= 5 mm small nodules only if they are TI-RADS-5. This study aims to determine the best suspicious ultrasound features related to cytology results in patients referred for FNAB of small thyroid nodules and construct an algorithm for declining unnecessary biopsies and selection of patients to be followed up. Methods This prospective observational study enrolled patients referred for US-guided biopsy of <= 1 cm thyroid nodules. Ultrasound features including composition, echogenicity, shape, margin, echogenic focus, hypoechoic rim, vascularity were assessed. The cytology results were dichotomised as either benign or malignant/high risk. The features with excellent interobserver reliability and more than 90% sensitivity were selected. Results Overall, 95 patients [82 (86.3%) females, mean age 48.5 +/- 11.9 years] with 95 small (<= 1 cm) thyroid nodules were biopsied. Cytology revealed 15 (15.8%) malignant nodules. Pure solid composition, hypoechogenicity, taller than wide shape and irregular margin of the nodules were significantly associated with malignancy. Hypoechogenicity (100%) and pure solid composition (93%) had very high sensitivity and excellent interobserver agreement (Cohen's Kappa 0.83, P = .003 for both) for predicting high risk/malignant nodule. In the absence of these two features, 48 (50.5%) nodules either would not require FNAB or follow-up. Conclusion The presence of cyst or iso/hyperechogenicity within a small thyroid nodule in patients already referred for invasive sampling safely allows for declining a decision of FNAB or follow-up without the concern of missing malignancy.