The precise molecular mechanism of action and targets through which thalidomide and related immunomodulatory drugs (IMiDs) exert their anti-tumor effects remains unclear. We investigated the role of cereblon (CRBN), a primary teratogenic target of thalidomide, in the anti-myeloma activity of IMiDs. CRBN depletion is initially cytotoxic to human myeloma cells but surviving cells with stable CRBN depletion become highly resistant to both lenalidomide and pomalidomide, but not to the unrelated drugs bortezomib, dexamethasone and melphalan. Acquired deletion of CRBN was found to be the primary genetic event differentiating isogenic MM1.S cell lines cultured to be sensitive or resistant to lenalidomide and pomalidomide. Gene expression changes induced by lenalidomide were dramatically suppressed in the presence of CRBN depletion further demonstrating that CRBN is required for lenalidomide activity. Downstream targets of CRBN include interferon regulatory factor 4 (IRF4) previously reported to also be a target of lenalidomide. Patients exposed to and putatively resistant to lenalidomide had lower CRBN levels in paired samples before and after therapy. In summary, CRBN is an essential requirement for IMiD activity, and a possible biomarker for the clinical assessment of anti-myeloma efficacy.