Thalidomide is in clinical use for the treatment of graft-versus-host disease in leukemia patients after bone marrow transplant. Low levels of the drug in plasma after oral administration have made an intravenous thalidomide formulation desirable. Thalidomide, however, is sparingly soluble in aqueous solution (50 micrograms/mL) and unstable. Complexation with hydroxypropyl-beta-cyclodextrin has significantly improved the aqueous solubility and stability of thalidomide. Results obtained with HPLC and 1H NMR spectrometry have demonstrated that the solubility is increased to 1.7 mg/mL and the half-life of a diluted solution is extended from 2.1 to 4.1 h. Hence, an intravenous thalidomide-hydroxypropyl- beta-cyclodextrin solution has the potential to significantly improve current therapy for graft-versus-host disease by providing sustained high levels of drug in the plasma.