Although multiple myeloma (MM) is incurable with currently available treatments, the introduction of thalidomide and the development of safer and more active thalidomide analogues represent a major advance in the therapy of this disease. Thalidomide, initially introduced for treatment of MM because of its anti-angiogenic properties, has shown remarkable activity alone and in combination with other drugs in patients across all stages of the disease. Given the potential for teratogenicity with thalidomide and the non-haematologic toxicities of the drug, several analogues referred to as "immunomodulatory drugs" (IMiDs) were developed with the intent of enhancing the immunomodulatory effect while minimizing the teratogenic risk. Lenalidomide (CC-5013) and Actimid (CC-4047) are the first such analogues to undergo clinical testing. Lenalidomide has shown impressive activity in relapsed refractory myeloma as well as newly diagnosed disease. The precise mechanism of anti-MM activity of thalidomide and the IMiDs is not clear, but studies suggest that several other mechanisms besides anti-angiogenic effects may play a role. In this paper we review the development, pharmacology, mechanism of action, pre-clinical and clinical efficacy, and the current status of thalidomide and the IMiDs in the treatment of MM.