This study is for patients with chronic lymphocytic leukemia (CLL) who have not yet received any treatment for their disease.

Current therapy for this disease includes the use of combination chemotherapy regimens containing Fludarabine and Rituximab, which have been found to be very effective for CLL. In this study, subjects will receive Fludarabine and Rituximab. After 3 cycles or 6 cycles of Fludarabine and Rituximab treatment, they will receive Lenalidomide. We are doing this research because we are attempting to improve the response, or outcome, of Fludarabine and Rituximab in previously untreated CLL patients. Lenalidomide is a drug that alters the immune system and it may also interfere with the development of tiny blood vessels that help support tumor growth. Therefore, in theory, it may reduce or prevent the growth of cancer cells. Lenalidomide is approved by the Food and Drug Administration (FDA) for treatment of specific types of myelodysplastic syndrome (MDS) and in combination with dexamethasone for patients with multiple myeloma (MM). MDS and MM are blood disorders that involve different types of blood cells. It is not approved for chronic lymphocytic leukemia. It is currently being tested in a variety of cancer conditions. In this case it is considered experimental.

This research is being done because we are attempting to find a better treatment for chronic lymphocytic leukemia. We do not know the effect of Lenalidomide following the regimen of Fludarabine and Rituximab.

The hypothesis of the study is that adding Lenalidomide after the standard treatment regimen of Fludarabine and Rituximab will have better outcomes than treatment with Fludarabine and Rituximab alone.

This is a single institution Phase II study where all enrolled patients with untreated CLL will receive fludarabine and rituximab (FR) combination therapy. Subjects who demonstrate Stable disease or Progressive disease after completing 3 cycles of FR will receive lenalidomide monotherapy for a maximum of 6 cycles. Subjects who achieve >/= PR after receiving 3 cycles of FR will receive 3 additional cycles of FR (maximum of 6 cycles). Upon completion of FR treatment subjects will receive lenalidomide monotherapy for a maximum of 6 cycles.

Response assessment will be performed for Module A (FR): after every cycle, but would include imaging after cycle 3 if clinically indicated. Response assessment will be performed for Module B (Lenalidomide monotherapy): Before starting Lenalidomide therapy, after every cycle and on completion of therapy. Imaging for Module B would be obtained before starting lenalidomide therapy, and on completion of therapy. Bone marrow biopsies will be performed prior to starting therapy in Module A (FR), prior to starting Module B (Lenalidomide), and on completion of Module B. Bone marrow biopsies can be obtained once during Lenalidomide therapy at the discretion of the investigator. Minimum residual disease assessment of bone marrow specimens should include immunohistochemistries and flow cytometry. Additional studies on bone marrow specimens will be sent for flow cytometric analysis (standard or four color flow), ZAP-70 immunohistochemical stains and FISH analysis (13q deletion, trisomy 12, 11q deletion, and 17p) will be performed at the time intervals described above.

Response will be assessed according to the Cheson Criteria.

Blood specimens for optional correlative studies will be drawn on Day 0 prior to FR, prior to starting lenalidomide, 90 days after initiation of lenalidomide, and 7 days after the last dose of lenalidomide.

Inclusion Criteria:

• Understand and voluntarily sign informed consent form
• No prior therapy for CLL
• Able to adhere to study visit schedule and other protocol requirements
• CLL with any Rai Stage requiring therapy
• ECOG performance status </= 2
• Absolute neutrophil count >/= 1.0
• Platelet count >/= 75
• Serum creatinine </= 1.5
• Total bilirubin </= 1.5
• AST and ALT </= 2 x ULN
• Females of childbearing potential must have negative pregnancy test
• Disease free of prior malignancies for >/= 5 years
• Able to take aspirin daily as prophylactic anticoagulation

Exclusion Criteria:

• Any serious medical condition, lab abnormality, or psychiatric illness that would prevent the subject from signing the informed consent form
• Pregnant or lactating females
• Any condition, including the presence of lab abnormalities, which places the subject at unacceptable risk if he/she were to participate in the study
• Use of any other experimental drug or therapy within 28 days of baseline
• Concurrent use of other anti-cancer agents or treatments
• Known positive for HIV or infectious active hepatitis, type A, B
• Known hypersensitivity to nucleoside analogue or rituximab
• Previous treatment for CLL prior to enrolling in study
• Known hypersensitivity to thalidomide
• The development of erythema nodosum if characterized by desquamating rash while taking thalidomide or similar drugs
• Any prior use of lenalidomide
• Active hemolysis