Familial medullary thyroid cancer (MTC) and its precursor, C cell hyperplasia (CCH), is associated with germline RET mutations causing multiple endocrine neoplasia type 2. However, some rare families with apparent MTC/CCH predisposition do not have a detectable RET mutation. To identify novel MTC/CCH predisposition genes we undertook exome resequencing studies in a family with apparent predisposition to MTC/CCH and no identifiable RET mutation. We identified a novel ESR2 frameshift mutation, c.948delT, which segregated with histological diagnosis following thyroid surgery in family members and demonstrated loss of ESR2-encoded ERβ expression in the MTC tumour. ERα and ERβ form heterodimers binding DNA at specific oestrogen-responsive elements (EREs) to regulate gene transcription. ERβ represses ERα-mediated activation of the ERE and the RET promoter contains three EREs. In vitro, we showed that ESR2 c.948delT results in unopposed ERα mediated increased cellular proliferation, activation of the ERE and increased RET expression. In vivo, immunostaining of CCH and MTC using an anti-RET antibody demonstrated increased RET expression. Together these findings identify germline ESR2 mutation as a novel cause of familial MTC/CCH and provide important insights into a novel mechanism causing increased RET expression in tumourigenesis.