Erythema nodosum leprosum (ENL, Type 2 reactions) complicates lepromatous and borderline lepromatous leprosy and can affect many organ systems, often with irreversible damage. The reactions commonly occur in the 2 years after starting treatment and often run a recurrent or chronic course, sometimes for many years. Even with WHO multi-drug therapy about 30% of LL patients experience ENL. We review drug management of ENL focussing on data from controlled trials and other studies. The treatment of ENL is difficult because high doses of steroids may be required for prolonged periods and do not always control the inflammation. The paradox of ENL is that it can be a life-threatening disorder and requires control with immunosuppression which may itself pose life-threatening risks for patients. Treatment with thalidomide provides an effective alternative to steroid therapy, gives better long-term control and avoids the adverse effects of prolonged steroid therapy. Controlled clinical trials have demonstrated that thalidomide rapidly controls ENL and is superior to aspirin and pentoxifylline. However, thalidomide is teratogenic when taken in early pregnancy and is unavailable in many leprosy endemic countries. We discuss the role of thalidomide in treating ENL, the complications encountered and risk reduction strategies that can be used. These include good patient selection and counselling, close supervision and adequate access to appropriate contraception. Further research is needed to improve the understanding and treatment of this severe and debilitating complication of leprosy. Topics for research include: i. The development of validated tools to measure the severity and/or activity of ENL. ii. A detailed assessment of the neurotoxic effects of thalidomide when used to treat ENL. iii. A well designed trial comparing thalidomide with prednisolone. iv. The development of a safe and effective alternative to both steroids and thalidomide.