Sarcoidosis, a chronic granulomatous disease of unknown etiology, is treated with immune suppressive drugs such as corticosteroids. Sarcoidosis patients have been reported to benefit clinically from treatment with thalidomide. We administered thalidomide for 16 weeks to eight patients with chronic skin sarcoidosis and evaluated the drug's effects before and with treatment. After thalidomide treatment, all skin biopsies showed decreases in granuloma size and reduction in epidermal thickness. We also observed extensive T cell recruitment into the granulomas, the appearance of multinucleated giant cells, and increased numbers of dermal Langerhans cells (CD1a(+)) and mature dendritic cells (CD83(+) or DC-LAMP(+)). Plasma IL-12 levels increased and remained elevated during the treatment period. We noted increased HLA-DR expression on peripheral blood lymphocytes and a corresponding drop in the naive T cell marker CD45RA. Our data suggest that thalidomide treatment of sarcoidosis results in granuloma differentiation to a Th1-type cellular immune response usually associated with protective immunity to tuberculosis and tuberculoid leprosy.