Although several mechanisms have been proposed to explain the activity of thalidomide, lenalidomide and pomalidomide in multiple myeloma (MM), including demonstrable anti-angiogenic, anti-proliferative and immunomodulatory effects, the precise cellular targets and molecular mechanisms have only recently become clear. A landmark study recently identified cereblon (CRBN) as a primary target of thalidomide teratogenicity. Subsequently it was demonstrated that CRBN is also required for the anti-myeloma activity of thalidomide and related drugs, the so-called immune-modulatory drugs (IMiDs). Low CRBN expression was found to correlate with drug resistance in MM cell lines and primary MM cells. One of the downstream targets of CRBN identified is interferon regulatory factor 4 (IRF4), which is critical for myeloma cell survival and is down-regulated by IMiD treatment. CRBN is also implicated in several effects of IMiDs, such as down-regulation of tumor necrosis factor-α (TNF-α) and T cell immunomodulatory activity, demonstrating that the pleotropic actions of the IMiDs are initiated by binding to CRBN. Future dissection of CRBN downstream signaling will help to delineate the underlying mechanisms for IMiD action and eventually lead to development of new drugs with more specific anti-myeloma activities. It may also provide a biomarker to predict IMiD response and resistance.