Thalidomide is an effective drug for chronic inflammatory diseases, but the mechanism underlying its immunomodulatory action remains uncertain. Thalidomide has been reported to clinically improve chronic inflammatory granulomatous disorders. In such disorders, the granulomas consist of epithelioid cells, scattered lymphocytes and multinucleated giant cells (MNGC; Langhans-type cells). The present experimental approach permitted the reproduction of MNGC formation from peripheral blood monocytes and examination of thalidomides effect on it. MNGC can be effectively generated from monocytes cultured in the presence of interleukin-4 (IL-4) and macrophage colony-stimulating factor(M-CSF) for 14 days. Thalidomide can inhibit the formation of MNGC in a dose-dependent manner. MNGC formation was partly inhibited by the presence of neutralizing TNF-alpha antibody in the responses induced by IL-4 and M-CSF. Autocrinal TNF-alpha production and modulation of cadhelin expression to regulate cell adhesion might be involved in this inhibitory action of thalidomide. Our results support thalidomides clinical efficacy in the treatment of chronic granulomatous disorders (granulomatosis).