Thalidomide--banned from clinical use in the 1960s because of severe teratogenicity--is now back in clinical practice as an effective agent in the treatment of relapsed and refractory multiple myeloma. Several clinical trials have determined that thalidomide is active in 25-35% of patients with relapsed myeloma. The role of thalidomide in early-stage myeloma is being actively investigated. Thalidomide has antiangiogenic and immunomodulatory properties and is an effective inhibitor of TNF-alpha. However, the mechanism of its action in myeloma remains unclear. Major toxicities of thalidomide include constipation, sedation, skin rash, fatigue and peripheral neuropathy. This paper summarizes the current status of thalidomide in multiple myeloma.