Multiple myeloma is a plasma cell malignancy that remains incurable with current treatment approaches including high-dose therapy and autologous stem cell transplantation. Thalidomide represents a major advance in the treatment of this disorder, having demonstrated significant activity in all phases of the disease. Thalidomide exerts its antimyeloma effect through multiple mechanisms including antiangiogenesis, immunomodulation and induction of apoptosis in tumor cells, as well as its effect on the tumor microenvironment. Corticosteroids have formed the mainstay of myeloma therapy for decades along with the alkylating agents and have demonstrated synergy when used in combination with thalidomide. The combination of thalidomide and dexamethasone has demonstrated remarkable activity in the treatment of both newly diagnosed as well as relapsed myeloma, and has become an important addition to the armamentarium of myeloma therapies. Overall responses of approximately 70% have been seen with this combination in patients with newly diagnosed myeloma. The combination is associated with an increased risk of deep vein thrombosis necessitating routine prophylactic anticoagulation. Other drugs have been added to this combination that also result in improved response rates. Currently, this combination is used in newly diagnosed patients as an induction therapy prior to stem cell transplant, for those who fail to achieve adequate response to dexamethasone alone or in whom a relatively rapid response is desired based on clinical presentation. Thalidomide analogs with a better safety profile are currently undergoing evaluation in the clinic.