Inclusion Criteria

DISEASE CHARACTERISTICS:

- Diagnosis of 1 of the following:

- Acute myeloid leukemia meeting 1 of the following criteria:

- Previously untreated and not a candidate for anthracycline-based
chemotherapy

- In first or second relapse or refractory

- Secondary to chemotherapy or an antecedent hematologic disorder and treated
with no more than 1 prior intensive induction regimen

- Chronic myelogenous leukemia in blast crisis at diagnosis or after prior
imatinib mesylate

- Myelodysplastic syndromes (MDS)

- Refractory anemia with excess blasts (RAEB) or RAEB in transformation

- Must meet at least 1 of the following criteria:

- Absolute neutrophil count no greater than 500/mm^3

- Platelet or red cell transfusion-dependent after no more than 1 prior
intensive induction chemotherapy

- Acute promyelocytic leukemia

- t(15, 17)

- Failed prior treatment with tretinoin and arsenic

- Relapsed disease at least 3 months after prior autologous stem cell
transplantation

- No active CNS leukemia

PATIENT CHARACTERISTICS:

Age

- 18 and over

Performance status

- ECOG 0-3

Life expectancy

- At least 8 weeks

Hematopoietic

- See Disease Characteristics

Hepatic

- Bilirubin no greater than 2.0 mg/dL

- AST and ALT less than 3 times upper limit of normal

Renal

- Creatinine clearance at least 50 mL/min

Cardiovascular

- Ejection fraction at least 40%

- No poorly controlled cardiac disease

Pulmonary

- No poorly controlled pulmonary disease

Other

- Not pregnant or nursing

- Negative pregnancy test

- Fertile female patients must use 1 highly effective and 1 additional method of
contraception for 4 weeks before, during, and for at least 4 weeks after study

- Male patients must use effective contraception during and for 4 weeks after study

- Willing and able to comply with the System for Thalidomide Education and Prescribing
Safety (STEPS) program

- HIV negative

- No poorly controlled infection

- No other active malignancy

- No severe peripheral neuropathy

PRIOR CONCURRENT THERAPY:

Biologic therapy

- See Disease Characteristics

- Prior thalidomide allowed for MDS

- At least 5 days since prior hematopoietic growth factors

- At least 2 weeks since prior biologic therapy

- No prior allogeneic bone marrow transplantation

Chemotherapy

- See Disease Characteristics

- At least 24 hours since prior hydroxyurea

Endocrine therapy

- At least 24 hours since prior corticosteroids

Radiotherapy

- Not specified

Surgery

- Not specified

Other

- At least 2 weeks since prior cytotoxic anticancer therapy

- Prior amifostine allowed for MDS