The introduction of new agents immunomodulatory drugs (IMiDs) and proteasome inhibitors has brought a major shift in therapeutic paradigm in the treatment of newly diagnosed and refractory multiple myeloma (MM). Thalidomide was the first immunomodulatory agent approved for use in myeloma. Although highly active, it is associated with considerable toxicity, particularly in older patients. Lenalidomide, an analog of thalidomide, was developed because of its more potent anti-MM activity and better toxicity profile than the parent compound. Since its introduction in 2004, lenalidomide has established a role in all phases of treatment in MM. The pleiotropic antitumor effects of lenalidomide have translated into clinical efficacy in diseases other than MM. Pomalidomide is a highly potent third-generation IMiD that shares similar pharmacologic properties as thalidomide, with very promising activity in MM and myelofibrosis. This review summarizes the mechanisms of action and clinical activity of IMiDs in MM.