Thalidomide and immunomodulatory drugs (IMiDs), which target multiple myeloma (MM) cells and the bone marrow microenvironment, can overcome drug resistance. These agents also have immunomodulatory effects. Specifically, we have reported that thalidomide increased serum interleukin-2 (IL-2) levels and natural killer (NK) cell numbers in the peripheral blood of responding MM patients. In this study, we investigated the mechanisms whereby IMiDs augment NK cell cytotoxicity. NK cytotoxicity and antibody-dependent cell-mediated cytotoxicity (ADCC) of peripheral blood mononuclear cells cultured with IMiDs were examined in the presence or absence of anti-IL-2 antibody, ciclosporin A or depletion of CD56-positive cells. IMiDs-induced signalling pathways, triggering IL-2 transcription in T cells, were also delineated. IMiDs facilitated the nuclear translocation of nuclear factor of activated T cells-2 and activator protein-1 via activation of phosphoinositide-3 kinase signalling, with resultant IL-2 secretion. IMiDs enhanced both NK cell cytotoxicity and ADCC induced by triggering IL-2 production from T cells. These studies defined the mechanisms whereby IMiDs trigger NK cell-mediated tumour-cell lysis, further supporting their therapeutic use in MM.