Chronic lymphocytic leukemia (CLL) involves a profound humoral immune defect and tumor-specific humoral tolerance that directly contribute to disease morbidity and mortality. CD154 gene therapy can reverse this immune defect, but attempts to do this pharmacologically have been unsuccessful. The immune-modulatory agent lenalidomide shows clinical activity in CLL, but its mechanism is poorly understood. Here, we demonstrate that lenalidomide induces expression of functional CD154 antigen on CLL cells both in vitro and in vivo. This occurs via enhanced CD154 transcription mediated by a Nuclear Factor of Activated T cells c1 (NFATc1)/Nuclear Factor-kappaB (NF-kappaB) complex and also through phosphoinositide-3 (PI3)-kinase pathway-dependent stabilization of CD154 mRNA. Importantly, CD154-positive CLL cells up-regulate BID, DR5, and p73, become sensitized to tumor necrosis factor-related apoptosis-inducing ligand (TRAIL)-mediated apoptosis, and promote costimulatory activation of normal B cells to produce antibodies. In CLL patients receiving lenalidomide, similar evidence of CD154 activation is observed including BID, DR5, and p73 induction and also development of anti-ROR1 tumor-directed antibodies. Our data demonstrate that lenalidomide promotes CD154 expression on CLL cells with subsequent activation phenotype, and may therefore reverse the humoral immune defect observed in this disease. This study is registered at http://clinicaltrials.gov as NCT00466895.