The bone marrow (BM) microenvironment consists of extracellular-matrix and the cellular compartment including immune cells. Multiple myeloma (MM) cell and BM accessory cell interaction promotes MM survival via both cell-cell contact and cytokines. Immunomodulatory agents (IMiDs) target not only MM cells, but also MM cell-immune cell interactions and cytokine signaling. Here we examined the in vitro effects of IMiDs on cytokine signaling triggered by interaction of effector cells with MM cells and BM stroma cells. IMiDs diminished interleukin-2, interferonγ, and IL-6 regulator suppressor of cytokine signaling (SOCS)1 expression in immune (CD4T, CD8T, natural-killer T, natural-killer) cells from both BM and PB of MM patients. In addition, coculture of MM cells with healthy PBMCs induced SOCS1 expression in effector cells; conversely, treatment with IMiDs down-regulated the SOCS1 expression. SOCS1 negatively regulates IL-6 signaling and is silenced by hypermethylation in MM cells. To define the mechanism of inhibitory-cytokine signaling in effector cells and MM cells, we next analyzed the interaction of immune cells with MM cells that were epigenetically modified to re-express SOCS1; IMiDs induced more potent CTL responses against SOCS1 re-expressing-MM cells than unmodified MM cells. These data therefore demonstrate that modulation of SOCS1 may enhance immune response and efficacy of IMiDs in MM.