Thalidomide--removed from widespread clinical use by 1962 because of severe teratogenicity--has antiangiogenic and immunomodulatory effects, including the inhibition of tumor necrosis alpha factor. It has now returned to practice as an effective oral agent in the management of various disease states including erythema nodosum leprosum, for which it was approved by the U.S. Food and Drug Administration in 1998, and more recently certain malignancies, including multiple myeloma. Although thalidomide's mechanism of action remains incompletely understood, considerable insight has been generated by extensive preclinical studies in multiple myeloma. Moreover, clinical trials have confirmed benefit in relapsed disease, and the role of thalidomide in treating newly diagnosed patients is currently under study. Its use in other tumors is under evaluation, with promise in renal cell carcinoma, prostate cancer, glioma, and Kaposi's sarcoma. Activity has also been demonstrated in chronic graft-versus-host disease and in symptom relief as part of palliative care.