Thalidomide is attracting new interest. Since the discovery of its remarkable efficacy in erythema nodosum leprosum, the drug has been used successfully in a variety of dermatologic and other diseases whose apparent common thread is immune dysregulation. Meanwhile, immunomodulatory and anti-inflammatory activities of thalidomide, particularly its inhibition of tumour necrosis factor alpha (TNF-alpha), have been identified and elucidated. The drug has also been found to inhibit angiogenesis. Recent clinical trials have shown thalidomide effective in graft-versus-host disease, Behçet's syndrome and aphthous ulcers and wasting associated with HIV infection. Provocative findings in other diseases, including primary HIV infection, HIV-associated diarrhoea, inflammatory bowel disease, cancer and sepsis, have suggested additional clinical applications. Use of thalidomide in women capable of childbearing is controversial. However, guidelines have emerged for prevention of teratogenicity and peripheral neuropathy, the drug's other major adverse effect. With appropriate safeguards, thalidomide may hold benefit for patients with a broad variety of disorders in which existing treatments are inadequate. Its current use may represent only a small part of its therapeutic potential.