The major therapeutic effects of thalidomide are the selective inhibition of tumour necrosis factor-alpha production by monocytes and alteration in cellular surface expression of integrins. The major drawbacks of the drug are teratogenicity and irreversible axonal neuropathy. Despite the latter, the drug thalidomide has acquired a unique, albeit limited role, in the treatment of an array of clinical situations where standard therapies have failed. Its use in the treatment of erythema nodosum leprosum maintains its availability worldwide; however, its role in the treatment of graft versus host disease (GVHD) and in the treatment of severe oral and genital ulcers associated with HIV and Behçet's disease is more prominent in the developed world. The recent trials of thalidomide in rheumatoid arthritis emphasise the problems with tolerability; an unacceptably high rate of adverse events led to the premature termination of these studies. Guidelines to promote the safe use of thalidomide have been published. The use of regular monitoring of the amplitudes of sensory nerve action potentials before and during treatment is encouraged and the value of adequate contraception whilst on and immediately after taking thalidomide is stressed.