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The therapeutic effect of thalidomide in chronic discoid lupus erythematosus (CDLE) was studied in sixty patients who were followed up for 2 years. In fifty-four patients (90%) a complete or marked regression of the disease was observed, but when the thalidomide was stopped, thirty out of forty-one (71%) patients relapsed. Patients undergoing a second course of thalidomide treatment again responded well. Nine of the patients in whom the disease recurred after successful treatment with thalidomide and who had been unresponsive to intermittent treatment with antimalarials, showed a good response to a second or third course with thalidomide. Mild side-effects were common and 25% of patients complained of slight to moderate polyneuritic symptoms. Since electroneurological examinations had not been performed before the thalidomide therapy, the frequency of neurological side-effects cannot be accurately calculated but we recommend neurological examinations before and periodically during thalidomide treatment. Thalidomide is a very effective drug in CDLE, but in most cases it exerts its effect only whilst treatment is continued. Its use should be restricted to patients resistant to topical steroids and systemic antimalarials.