Although thalidomide is highly teratogenic, it has been prescribed for treating multiple myeloma and Hansen's disease. However, its mechanism of action is not fully understood. Here, we employed a reverse transcription quantitative PCR array to measure the expression of 84 genes in human induced pluripotent stem cells (hiPSCs) and their mesodermal differentiation. Thalidomide altered the expression of undifferentiated marker genes in both cell types. Thalidomide affected more genes in the mesoderm than in the hiPSCs. Ectoderm genes were upregulated but mesendoderm genes were downregulated by thalidomide during mesoderm induction, suggesting that thalidomide altered mesoderm differentiation. We found that (fatty acid binding protein 7) was dramatically downregulated in the hiPSCs. FABP is related to retinoic acid, which is important signaling for limb formation. Moreover, thalidomide altered the expression of the genes involved in TGF-β signaling, limb formation, and multiple myeloma, which are related to thalidomide-induced malformations and medication. In summary, iPSCs can serve as useful tools to elucidate the mechanisms underlying thalidomide malformations .