The relatively high oncostatic specificity of cyclophosphamide (CP) in vivo is shown to be due to the cytotoxic specificity of 4-hydroxycyclophosphamide (4-hydroxy-CP), the first product of metabolic activation of CP in the liver. This specificity can be evaluated not only in vivo by measuring the therapeutic index, but also in vitro by determining its cytotoxicity against Yoshida ascites tumor cells. Evidence is given that 4-hydroxy-CP is not an alkylating agent itself, but attains this property only by release of an alkylating N,N-(2-chloroethyl)phosphorodiamic acid moiety and acrolein. The energetic source for this rate-limiting toxication results from the resonance stabilization of the released acrolein. Reactions at the cryptoaldehyde group of 4-hydroxy-CP, which reduce or prevent the resonance stabilization of the 3-carbon unit to be released, lead to a deactivation of the primary metabolite of CP thus reducing or even preventing toxication, and hence influencing both the alkylating and cytotoxic activities of the molecule. Accordingly, it could be demonstrated by the reaction of 4-hydroxy-CP with thiols yielding 4-(S-R)-mercapto CP derivatives that the toxication of 4-hydroxy-CP can be controlled under physiologic conditions of pH and temperature. In the case of free protein sulfhydryl groups, this reaction also leads to fixation onto a macromolecule of the CP metabolite. On the basis of these peculiar reactivities of the oxazaphosphorine ring of 4-hydroxy-CP and of the partial reaction kinetics involved during toxication or deactivation, the significance of these findings to the problem of CP specificity is discussed.