Immunomodulatory drugs (IMiDs) are a cornerstone in the treatment of multiple myeloma (MM), but specific markers to predict outcome are still missing. Recent work pointed to a prognostic role for IMiD target genes (e.g. CRBN). Moreover, indirect activity of IMiDs on immune cells correlated with outcome, raising the possibility that cell populations in the bone marrow (BM) microenvironment could serve as biomarkers. We therefore analysed gene expression levels of six IMiD target genes in whole BM samples of 44 myeloma patients treated with lenalidomide-dexamethasone. Expression of CRBN (R = 0.30, P = .05), IKZF1 (R = 0.31, P = .04), IRF4 (R = 0.38, P = .01), MCT-1 (R = 0.30, P = .05), and CD147 (R = 0.38, P = .01), but not IKZF3 (R = -0.15, P = .34), was significantly associated with response. Interestingly, IKZF1 expression was elevated in BM environmental cells and thus selected for further investigation by multicolor flow cytometry. High IKAROS protein levels in total BM mononuclear cells (median OS 83.4 vs. 32.2 months, P = .02), CD19 B cells (median OS 71.1 vs. 32.2 months, P = .05), CD3 CD8 T cells (median OS 83.4 vs 19.0 months, P = .008) as well as monocytes (median OS 53.9 vs 18.0 months, P = .009) were associated with superior overall survival (OS). In contrast, IKAROS protein expression in MM cells was not predictive for OS. Our data therefore corroborate the central role of immune cells for the clinical activity of IMiDs and built the groundwork for prospective analysis of IKAROS protein levels in distinct cell populations as a potential biomarker for IMiD based therapies.