Thalidomide is an immunomodulatory agent that is approved for use in patients with cutaneous manifestations of erythema nodosum leprosum (ENL). It is currently under clinical investigation in a wide range of malignancies and immunologic-based disorders. Structural analogs of thalidomide have been synthesized in order to explore potential molecular targets of thalidomide, as well as to identify new therapeutics. Members of one class of analogs, termed immunomodulatory drugs (IMiD), are 100 to 1,000 times more potent than thalidomide in regulating cytokine production by peripheral blood mononuclear cells and providing a costimulatory signal for T-cell proliferation. Notably, the nature of the stimulus and the cell type are important determinants as to whether the IMiDs or thalidomide cause an inhibitory or stimulatory effect. The IMiD CDC-501 has been selected for clinical development; it had been safely administered to volunteers in single doses of 50 to 400 mg and in multiple doses of 100 mg for 7 days. Phase I/II studies of CDC-501 in multiple myeloma are in progress.