We performed a phase II study to test the efficacy and feasibility of induction therapy with vincristine, adriamycin and dexamethasone (VAD) and intermediate-dose melphalan, 70 mg/m2 (IDM), to autologous or allogeneic stem cell transplantation in newly diagnosed multiple myeloma (MM). A total of 77 patients received two cycles of VAD (n = 62) and/or two cycles of i.v. IDM 70 mg/m2 (n = 15) combined with G-CSF. PBSC were harvested after the first IDM, successfully in 87% of patients. Patients with a response to induction received myeloablative therapy with PBSCT (n = 50) followed by IFN maintenance or allo-BMT (n = 11). Seventy-two per cent of patients achieved a response after VAD which increased to 85% after IDM. Of patients who received PBSCT and allo-BMT, 24% and 45% achieved CR, respectively. Toxicity of induction consisted mainly of bone marrow suppression after IDM (median 8 days) with prolonged aplasia in 11% of patients after the second IDM. Only six infections WHO grade 3 occurred during induction. Treatment-related mortality of PBSCT and allo-BMT was 6% and 18%, respectively. Median time of follow-up is 44 months, and 50% of patients after PBSCT and 60% of patients after allo-BMT are still in remission. Survival rates of all patients were 82%, 75% and 63%, and for transplanted patients 86%, 79% and 68% after 12, 24 and 36 months. Well known prognostic factors, including alpha-IFN maintenance after PBSCT, were not significant for response or survival although patients in CR after allo-BMT had a strong tendency for better outcome. VAD/IDM is an effective and safe induction therapy for autologous and allogeneic stem cell transplantation. Based on these observations a phase III trial was started in October 1995 comparing IFN maintenance with PBSCT and allo-BMT after response to induction with VAD and IDM.