10 patients with borderline and lepromatous leprosy were sdected for a prolonged trial with recombinant interferon 3, (rIFN-3,). Patients received 30/zg intradermally for six injections over a 9-d period, and then either 100/zg intradermally every 1 mo for 10 mo or every 2 wk for 5 mo (total, 1.2 mg). Erythema nodosum leprosum (ENL) was induced in 60% of the patients within 6-7 mo, as compared with an incidence of 15% per year with multiple drug therapy alone. The mean whole-body reduction in bacterial index over the first 6 mo was 0.9 log units. Cutaneous induration at the intradermal injection sites of >--15 mm predicted the development of a subsequent reactional state. Monocytes obtained from patients receiving the lymphokine demonstrated an increased respiratory burst and a 2.5-5.1-fold increase in tumor necrosis factor ot (TNF-cr secretion in response to agonists. Patients in ENL had an even higher release of TNF-o~ from monocytes as wen as high levels of TNF-c~ in the plasma (mean, 2,000 pg/ml). Thalidomide therapy was required to treat the systemic manifestations of ENL. Control of toxic symptoms with thalidomide was associated with a 50-80% reduction in agonist-stimulated monocyte TNF-ol secretion. IFN-3, enhanced the monocyte release of TNF-ot by 3-7.5-fold (agonist dependent) when added to patient's cells in vitro, and this could be suppressed by the in vitro addition of 10/~g/ml of thalidomide.