Although thalidomide (Thal) was initially used to treat multiple myeloma (MM) because of its known antiangiogenic effects, the mechanism of its anti-MM activity is unclear. These studies demonstrate clinical activity of Thal against MM that is refractory to conventional therapy and delineate mechanisms of anti-tumor activity of Thal and its potent analogs (immunomodulatory drugs [IMiDs]). Importantly, these agents act directly, by inducing apoptosis or G1 growth arrest, in MM cell lines and in patient MM cells that are resistant to melphalan, doxorubicin, and dexamethasone (Dex). Moreover, Thal and the IMiDs enhance the anti-MM activity of Dex and, conversely, are inhibited by interleukin 6. As for Dex, apoptotic signaling triggered by Thal and the IMiDs is associated with activation of related adhesion focal tyrosine kinase. These studies establish the framework for the development and testing of Thal and the IMiDs in a new treatment paradigm to target both the tumor cell and the microenvironment, overcome classical drug resistance, and achieve improved outcome in this presently incurable disease.