Thalidomide causes birth defects. The U.S. Food and Drug Administration (FDA) and other regulatory agencies have approved marketing of the drug only with an auditable risk evaluation and mitigation strategy that ensures that people using the drug are aware of the risks and avoid pregnancy; this applies to both men and women, as the drug can be transmitted in semen.
There is a high risk that thalidomide can cause excessive blood clots. There is also a high risk that thalidomide can interfere with production of several types of new blood cells, creating a risk of infection via neutropenia, leukopenia, and lymphopenia, and risks that blood will not clot via thrombocytopenia. There is also a risk of anemia via lack of red blood cells.  The drug can also damage nerves, causing potentially irreversible peripheral neuropathy.
Thalidomide has several adverse cardiovascular effects, including risk of heart attacks, pulmonary hypertension, and changes in heart rhythm, such as syncope, bradycardia, and atrioventricular block.
Thalidomide can cause liver damage and severe skin reactions like Stevens–Johnson syndrome. It tends to make people sleepy, which creates risk when driving and operating other machinery. As it kills cancer cells, it can cause tumor lysis syndrome. Thalidomide can prevent menstruation.
In addition, very common (reported in more than 10% of people) adverse effects include tremor, dizziness, tingling, numbness, constipation, and peripheral edema.
Common adverse effects (reported by 1–10% of people) include confusion, depressed mood, reduced coordination, heart failure, difficulty breathing, interstitial lung disease, lung inflammation, vomiting, dry mouth, rashes, dry skin, fever, weakness, and a sense of unwellness.