The cytokine tumour necrosis factor-alpha (TNF-alpha) has been implicated in the aetiology of rheumatoid arthritis in humans as well as of experimental arthritis in rodents. Thalidomide, and to a greater extent the new thalidomide analogue CC1069, inhibit monocyte TNF-alpha production both in vitro and in vivo. The aim of the present study is to establish whether these drugs block production of TNF-alpha as well as IL-2 by rat leucocytes and whether this inhibition affects the development of rat adjuvant arthritis (AA). Cultured splenocytes were stimulated with either lipopolysaccharide (LPS) or concanavalin A (Con A) in the presence of thalidomide, CC1069, or solvent, and the production of TNF-alpha and IL-2 were compared. Next, adjuvant was injected into the base of the tail of rats without or with daily intraperitoneal injections with 100-200 mg/kg per day thalidomide or 50-200 mg/kg per day CC1069. Disease activity, including ankle swelling, hind limb radiographic and histological changes, weight gain, and ankle joint cytokine mRNA levels, were monitored. CC1069, but not the parent drug thalidomide, inhibited in vitro production of TNF-alpha and IL-2 by stimulated splenocytes in a dose-dependent manner. In vivo, a dose-dependent suppression of AA disease activity occurred in the CC1069-treated animals. In contrast, thalidomide-treated rats experienced comparable arthritis severity to placebo-treated animals. There was also a reduction in TNF-alpha and IL-2 mRNA levels in the ankle joints of CC1069-treated rats compared with thalidomide- and placebo-treated arthritic rats. Early initiation of CC1069 treatment suppressed AA inflammation more efficiently than delayed treatment. We conclude that thalidomide, which did not suppress TNF-alpha or IL-2 production in vitro by Lewis rat cells, did not suppress development of rat AA. However, the development of rat AA can be blocked by the thalidomide analogue CC1069, which is an efficient inhibitor of TNF-alpha production and IL-2 in vitro.