Lenalidomide and pomalidomide have both been evaluated clinically for their properties as anticancer agents, with lenalidomide being available commercially. We previously reported that both compounds cause cell cycle arrest in Burkitt's lymphoma and multiple myeloma cell lines by increasing the level of p21(WAF-1) expression. In the present study, we unravel the molecular mechanism responsible for p21(WAF-1) up-regulation using Namalwa cells as a human lymphoma model. We show that the increase of p21(WAF-1) expression is regulated at the transcriptional level through a mechanism independent of p53. Using a combination of approaches, we show that several GC-rich binding transcription factors are involved in pomalidomide-mediated up-regulation of p21(WAF-1). Furthermore, we report that p21(WAF-1) up-regulation is associated with a switch from methylated to acetylated histone H3 on p21(WAF-1) promoter. Interestingly, lysine-specific demethylase-1 (LSD1) silencing reduced both pomalidomide and lenalidomide up-regulation of p21(WAF-1), suggesting that this histone demethylase is involved in the priming of the p21(WAF-1) promoter. Based on our findings, we propose a model in which pomalidomide and lenalidomide modify the chromatin structure of the p21(WAF-1) promoter through demethylation and acetylation of H3K9. This effect, mediated via LSD1, provides GC-rich binding transcription factors better access to DNA, followed by recruitment of RNA polymerase II and transcription activation. Taken together, our results provide new insights on the mechanism of action of pomalidomide and lenalidomide in the regulation of gene transcription, imply possible efficacy in p53 mutated and deleted cancer, and suggest new potential clinical uses as an epigenetic therapy.