Currently, licensed disease-modifying agents for multiple sclerosis (MS) all share the need for parenteral administration. Oral therapies would carry the advantage of convenience and greater acceptability. Teriflunomide is one of several oral agents currently undergoing Phase III investigation. This article describes the mode of action of teriflunomide which largely depends on inhibition of pyrimidine synthesis. We review the evidence so far on the efficacy of teriflunomide in animal models and Phase II human studies. In view of teriflunomides favourable safety profile it appears to be a promising oral alternative to interferon beta and glatiramer acetate. The ongoing Phase III investigations of teriflunomide as mono- and combination therapy are discussed.