Relapsed or refractory multiple myeloma has a poor outlook. Some patients respond to thalidomide; however, criteria for predicting response have not been conclusively identified. We initiated a prospective multicenter phase 2 trial in patients with relapsed/refractory myeloma using thalidomide up to the maximum dose, 800 mg/d. Interferon-alpha-2B (1.5-3.0 x 10(6) U, subcutaneously, 3 times per week) was added at week 12 if disease was responsive or stable. Patients intolerant of interferon continued thalidomide alone. Thalidomide with or without interferon was continued until disease progression. Objectives were to determine toxicity, response rate (RR), progression-free survival (PFS), and overall survival (OS) and to elucidate relevant prognostic factors. We enrolled 75 patients, with median age 64 years (range, 36-83 years). Median individual maximum-tolerated dose of thalidomide was 600 mg/d; 41% reached 800 mg/d. Overall RR was 28%, and 55% stable disease (SD). The only predictor for response was age 65 years or younger (38% versus 17%; P =.043). At 18 months median follow-up, the actuarial median PFS and OS were 5.5 and 14.6 months, respectively. Multivariate analysis for OS demonstrated age exceeding 65 years (median, 9.2 months versus longer than 26 months; P =.011), raised serum lactate dehydrogenase (P =.002), and raised serum creatinine (P =.007) predicted inferior outcomes. Nineteen patients received interferon. Ten discontinued owing to toxicity. Four of 12 patients who received interferon for longer than 4 weeks were converted from SD to partial response. Our findings confirm substantial activity of thalidomide in relapsed/refractory myeloma. Interferon may improve response in selected patients, but is often not tolerated. The inferior outcome demonstrated in those with the identified prognostic factors is important in planning management for such patients.