Multiple myeloma (MM) remains incurable with current therapies, and novel biologically based therapies are urgently needed. Thalidomide and its analogues, as well as proteasome inhibitors, are examples of such novel agents that target both the myeloma cell and its microenvironment and can overcome classical drug resistance. In this study we demonstrate that arsenic trioxide (As2O3) mediates anti-MM activity both directly on tumor cells and indirectly by inhibiting production of myeloma growth and survival factors in the bone marrow (BM) microenvironment. Specifically, As2O3 at clinically achievable levels (2-5 microM) induces apoptosis even of drug-resistant MM cell lines and patient cells via caspase-9 activation, enhances the MM cell apoptosis induced by dexamethasone, and can overcome the antiapoptotic effects of interleukin 6. As2O3 also acts in the BM microenvironment to decrease MM cell binding to BM stromal cells, inhibits interleukin 6 and vascular endothelial growth factor secretion induced by MM cell adhesion, and blocks proliferation of MM cells adherent to BM stromal cells. These studies provide the rationale for clinical trials of As2O3, either alone or together with dexamethasone, to overcome classical drug resistance and improve outcome in patients with MM.