Recent studies have demonstrated that the immunomodulatory drugs (IMiDs) lead to the degradation of the transcription factors Ikaros and Aiolos. However, why their loss subsequently leads to multiple myeloma (MM) cell death remains unclear. Using CRISPR-Cas9 genome editing, we have deleted IKZF1/Ikaros and IKZF3/Aiolos in human MM cell lines to gain further insight into their downstream gene regulatory networks. Inactivation of either factor alone recapitulates the cell intrinsic action of the IMiDs, resulting in cell cycle arrest and induction of apoptosis. Furthermore, evaluation of the transcriptional changes resulting from their loss demonstrates striking overlap with lenalidomide treatment. This was not dependent on reduction of the IRF4-MYC “axis,” as neither protein was consistently downregulated, despite cell death occurring, and overexpression of either factor failed to rescue for Ikaros loss. Importantly, Ikaros and Aiolos repress the expression of interferon-stimulated genes (ISGs), including CD38, and their loss led to the activation of an interferon-like response, contributing to MM cell death. Ikaros/Aiolos repressed CD38 expression through interaction with the nucleosome remodeling and deacetylase complex in MM. IMiD-induced loss of Ikaros or treatment with interferon resulted in an upregulation of CD38 surface expression on MM cells, priming for daratumumab-induced NK cell-mediated antibody-dependent cellular cytotoxicity. These results give further insight into the mechanism of action of the IMiDs and provide mechanistic rationale for combination with anti-CD38 monoclonal antibodies.