Abstract Background Antibody-based therapies targeting CD38 are currently used as single agents as well as in combination regimens for multiple myeloma, a malignant plasma cell disorder. In this study, we aimed to develop anti-CD38 single-domain antibodies (sdAbs) that can be used to trace CD38⁺ tumour cells and subsequently used for targeted radionuclide therapy. SdAbs are derived from Camelidae heavy-chain antibodies and have emerged as promising theranostic agents due to their favourable pharmacological properties. Methods Four different anti-CD38 sdAbs were produced, and their binding affinities and potential competition with the monoclonal antibody daratumumab were tested using biolayer interferometry. Their binding kinetics and potential cell internalisation were further studied after radiolabelling with the diagnostic radioisotope Indium-111. The resulting radiotracers were evaluated in vivo for their tumour-targeting potential and biodistribution through single-photon emission computed tomography (SPECT/CT) imaging and serial dissections. Finally, therapeutic efficacy of a lead anti-CD38 sdAb, radiolabelled with the therapeutic radioisotope Lutetium-177, was evaluated in a CD38⁺ MM xenograft model. Results We retained anti-CD38 sdAb #2F8 as lead based on its excellent affinity and superior stability, the absence of competition with daratumumab and the lack of receptor-mediated internalisation. When intravenously administered to tumour-xenografted mice, radiolabelled sdAb #2F8 revealed specific and sustained tumour retention with low accumulation in other tissues, except kidneys, resulting in high tumour-to-normal tissue ratios. In a therapeutic setting, myeloma-bearing mice received three consecutive intravenous administrations of a high (18.5 MBq) or a low radioactive dose (9.3 MBq) of ¹⁷⁷Lu-DTPA-2F8 or an equal volume of vehicle solution. A dose-dependent tumour regression was observed, which translated into a prolonged median survival from 43 days for vehicle-treated mice, to 62 days (p = 0.027) in mice receiving the low and 65 days in mice receiving the high (p = 0.0007) radioactive dose regimen, respectively. Conclusions These results highlight the theranostic potential of radiolabelled anti-CD38 sdAbs for the monitoring and treatment of multiple myeloma.