Introduction: Leflunomide is a prodrug which is rapidly converted following oral administration and absorption to an active metabolite with anti-proliferative effects (A77 1726/teriflunomide). Leflunomide was developed as an immunomodulatory agent and subsequently developed as a disease-modifying anti-rheumatic drug (DMARD) for the management of rheumatoid arthritis (RA). Areas covered: This review article covers the mechanism of action of the drug, clinical indications, including efficacy data from clinical trials, safety data from clinical trials, post marketing studies and surveillance databases and safety in special populations. Additionally, the review discusses the current place of leflunomide in the management of RA, and its likely future as an anti-rheumatic drug. Expert opinion: Leflunomide is a relatively safe drug, with proven efficacy in RA management. Its clinical use is limited by the historic parallel development of other agents, including methotrexate, which has become the synthetic DMARD of choice and biological DMARDs that have superior efficacy. © 2013 Informa UK, Ltd.