Ultralow-threshold laser emission from a neodymium-doped silica toroidal microcavity is theoretically analyzed and experimentally demonstrated, along with the detailed analysis and compensation of the thermo-optic effect in this microlaser system. The threshold power and slope efficiency of microlaser emission are derived based on coupled-mode theory and analytic formulas, associated with the demonstration of their dependence on neodymium ion concentration and the quality factor of the microtoroid. In the experiment, a single-mode laser and multi-mode laser with threshold power as low as 1.6 µW at the wavelength of 1064 nm band are obtained via changing the coupling condition of the cavity-tapered fiber system, resonant pump wavelength, and pump power, respectively. The single-mode laser emission at the 910 nm band is also realized with the threshold power of about 108.5 µW. Furthermore, considering the potential application, non-resonant pumping for the laser emission at the 1064 nm band is characterized with threshold power of 137 µW due to the influence of the thermo-optic effect and low slope efficiency of non-resonant pumping. By coating UV-glue with a negative thermo-optic coefficient on the microtoroid surface, the compensation of the thermo-optic effect of the microtoroid is analyzed theoretically, which on the other hand can also be used for the potential application of high-sensitivity temperature sensing with sensitivity of −0.138nm/∘C.