The interaction between tumor cells and the local milieu where are homing has recently become the focus of extensive research in a broad range of malignancies. Among them, multiple myeloma (MM) is now recognized as a prototypical tumor model for the characterization of these interactions. This is due not only to the propensity of MM cells to target the skeleton and form lytic bone lesions, but because interactions of MM cells with normal cells of the bone milieu can attenuate the anti-tumor activity of conventional therapies, such as glucocorticoids and standard cytotoxic agents, including alkylators. Herein, we highlight the recent advances in our understanding of cellular and molecular mechanisms of interactions between MM cells and their milieu. Particular emphasis is placed on the interface between MM cells and normal cell compartments of the BM, especially bone marrow stromal cells (BMSCs), and on the development of a series of new classes of therapeutic agents, including the proteasome inhibitor bortezomib, thalidomide and lenalidomide, which counteract specific aspects of those MM–BM interactions. The significant clinical activity of these novel therapies has not only led to a new era in the therapeutic management of this disease, but also underscored the importance of comprehensively characterizing the role of the local microenvironment in the pathophysiology of human neoplasias. J. Cell. Biochem. 101: 950–968, 2007. © 2007 Wiley-Liss, Inc.