We report a case of hepatitis in a 58-year-old woman being treated with thalidomide for end-stage plasma cell leukemia. The patient had a medical history including chronic stable hepatitis C infection. At diagnosis there was a severe anemia, thrombocytopenia, hypercalcemia, IgG paraproteinemia, peripheral blood myeloma cells, and a marrow plasmacytosis with lytic bony lesion. The disease was refractory to standard chemotherapy, and she was treated with oral thalidomide. Within 1 week she became jaundiced and developed a marked transaminitis. This promptly resolved upon cessation of thalidomide alone. Thalidomide has recently enjoyed renewed interest as a treatment in many disorders, including plasma cell leukemia. To our knowledge, this is the first reported case of thalidomide-associated hepatotoxicity. Although the mechanism of its actions on the liver are uncertain, it is possible that thalidomide acts as a direct hepatotoxin or as an immuno-modulator, altering the activity of chronic viral hepatitis. We present this case to increase awareness of a new potential side effect of thalidomide as its clinical indications expand. Am. J. Hematol. 66:300-302, 2001.