Cyclophosphamide and ifosfamide are alkylating agents administered to treat malignant disease. They are prodrugs and require activation by hepatic microsomal enzymes before being metabolized to their respective cytotoxic species, phosphoramide mustard and ifosfamide mustard. These species alkylate DNA, forming DNA-DNA cross-links that result in inhibition of DNA synthesis and cell death. Resistance to oxazaphosphorines is poorly understood, although increased aldehyde dehydrogenase activity may be a significant factor. Although both compounds share a common metabolic pathway, 4-hydroxylation of ifosfamide occurs at a slower rate and to a lesser extent than that of cyclophosphamide. This difference significantly alters the toxicity profile of ifosfamide. Leukopenia is the dose-limiting toxicity of cyclophosphamide, and neurotoxicity is the dose-limiting toxicity of ifosfamide when preventive measures are taken to reduce urotoxicity. With recent findings concerning their basic and clinical pharmacology, the therapeutic index of these compounds can be improved.