Felty's syndrome (FS) is a rare manifestation of severe rheumatoid arthritis (RA). It is an immune mediated inflammatory process, usually treated with standard disease modifying antirheumatic drugs. We describe a case of severe FS that developed in a patient receiving methotrexate therapy for RA. Treatment with etanercept resulted in severe allergic cutaneous reactions. The patient subsequently responded to treatment with leflunomide. The response included dramatic improvement of leukopenia and neutropenia as well as excellent control of his arthritis. Leflunomide has recently been used effectively for the treatment of RA and may be useful for the management of patients with FS.