The immunomodulatory properties of thalidomide are currently being exploited therapeutically in conditions as diverse as erythema nodosum leprosum, chronic graft-vs-host disease, rheumatoid arthritis, and sarcoidosis. The relevant mechanism of action of thalidomide in these diseases remains unclear. The important role recently ascribed to IL-12, a cytokine critical to the development of cellular immune responses, in the pathogenesis of several of these conditions led us to examine whether thalidomide affects the production of IL-12. Thalidomide potently suppressed the production of IL-12 from human PBMC and primary human monocytes in a concentration-dependent manner. Thalidomide-induced inhibition of IL-12 production was additive to that induced by suboptimal inhibiting doses of dexamethasone, and occurred by a mechanism independent of known endogenous inhibitors of IL-12 production. These results suggest that thalidomide may have therapeutic utility in a wide range of immunologic disorders that are characterized by inappropriate cellular immune responses.