Uncertainties about the clinical and cost effectiveness of immunomodulatory drugs for multiple sclerosis (MS), as well as concerns about funding treatment, continue to influence their use. The National Institute for Clinical Excellence (NICE) in England and Wales has been appraising the evidence on the clinical and cost effectiveness of IFN-beta and glatiramer to provide guidance to the NHS. It has proved a difficult task. This paper is an update of our systematic review which assesses the evidence on the clinical and cost effectiveness of a range of immunomodulatory drugs for MS, including azathioprine, IFN-beta, cladribine, cyclophosphamide, glatiramer, intravenous immunoglobulin (IVIg), methotrexate and mitoxantrone. Searches of electronic databases (such as Medline, Embase and the Cochrane Library) and bibliographies of related papers, as well as consultation with experts, for systematic reviews of randomised controlled trials (RCTs) and direct reports of RCTs revealed 26 studies of clinical effectiveness and eight economic evaluations that met the criteria for inclusion. The quality of the evidence was often poor, affected by methodological limitations. Evidence on the clinical effectiveness of immunomodulatory drugs showed some clinical effect, with reductions in relapse rates and/or progression to disability for people with MS. However, benefits from these drugs may be lessened by side effects. Assessment of cost effectiveness was limited to IFN-beta and glatiramer, showing that any benefit from these drugs was achieved at very high cost. The inadequacies in the evidence of clinical and cost effectiveness on some immunomodulatory drugs for the treatment of people with MS necessitate further rigorous RCTs and comparative economic evaluations of different alternatives.