Few prospective studies in cutaneous and systemic lupus erythematosus (CLE/SLE) assessed thalidomide-induced peripheral neuropathy (TiPN) incidence/reversibility, and most have not excluded confounding causes neither monitored thalidomide plasma levels. To evaluate TiPN incidence/reversibility, coasting effect and its association with thalidomide plasma levels in CLE/SLE. One-year prospective study of thalidomide in 20 CLE/SLE patients without pregnancy potential, with normal nerve conduction study (NCS), and excluded other PN causes. Thalidomide levels were determined by high-performance liquid chromatography/tandem mass spectrometry. Twelve patients (60%) developed TiPN: 33.3% were symptomatic and 66.6% asymptomatic. Half of this latter group developed coasting effect (TiPN symptoms 1-3 months after drug withdrawal). The main predictive factors for TiPN were treatment duration ≥6 months (p = 0.025) and cumulative dose (p = 0.023). No difference in plasma thalidomide levels between patients with/without TiPN was observed (p = 0.464). After drug withdrawal, 75% symptomatic TiPN patients improved their symptoms. Seven TiPN patients underwent an additional NCS after drug withdrawal: 42.8% worsened NCS, 14.2% was stable, and 42.8% had improved NCS. Our data provides novel evidence of coasting effect in half of asymptomatic patients with TiPN. The irreversible nature of this lesion in 25% of TiPN patients reinforces the relevance of early NCS monitoring, and suggests thalidomide use solely as a bridge for other effective therapy for refractory cutaneous lupus patients.