The extensive autoimmune, anti-inflammatory, and anticancer applications of thalidomide have inspired a growing number of studies and clinical trials. As an inexpensive agent with relatively low toxicity, thalidomide is regarded as a promising therapeutic candidate, especially for malignant diseases. We review its therapeutic effects in hematology, including those on multiple myeloma, Waldenstroem macroglobulinemia, lymphoma, mantle-cell lymphoma, myelodysplastic syndrome, hereditary hemorrhagic telangiectasia, and graftversus-host disease. Most studies have shown satisfactory results, although several have reported the opposite. Aside from optimal outcomes, the toxicities and adverse effects of thalidomide should also be examined. The current work includes a discussion of the mechanisms through which the novel biological effects of thalidomide occur, although more studies should be devoted to this aspect. With appropriate safeguards, thalidomide may benefit patients suffering from a broad variety of disorders, particularly refractory and resistant diseases.