Previous studies have shown that when multibacillary leprosy patients were treated with recombinant human interferon gamma (rhuIFN-gamma) for 6-10 months there was an accelerated reduction in the number of acid-fast bacilli in the skin at the site of injection as well as an accelerated bacillary reduction at distal sites. However, this favorable out-come of IFN-gamma treatment was associated with the development of erythema nodosum leprosum (ENL). The present study was undertaken to investigate whether rhuIFN-gamma-induced bacillary clearance could be disassociated from the induction of ENL. rhuIFN-gamma was administered together with thalidomide and conventional multidrug chemotherapy to newly diagnosed leprosy patients. During treatment with this combination of drugs, the mean reduction in bacterial load was the same as the reduction observed with chemotherapy alone. Moreover, the inclusion of thalidomide in the treatment regimen was associated with a low frequency of ENL episodes. A second group of leprosy patients, who had already completed 2 years of chemotherapy, were treated with rhuIFN-gamma only. In those patients who were skin bacilli negative, ENL did not occur during rhuIFN-gamma treatment. In contrast, in bacilli-positive patients the frequency of ENL during rhuIFN-gamma treatment was higher, as was the occurrence of local erythema and induration. However, rhuIFN-gamma treatment without concomitant chemotherapy did not result in a reduction in the bacterial load in the skin of bacilli-positive patients. These findings, taken together, indicate that rhuIFN-gamma does not, by itself, accelerate bacterial clearance, but requires concomitant chemotherapy to achieve the accelerated reduction in bacillary load. Thalidomide reduces the frequency of IFN-gamma-induced ENL, but also eliminates the IFN-gamma-induced bacillary clearance.