An alkylating agent adds an alkyl group (C_nH_2n+1) to DNA. It attaches the alkyl group to the guanine base of DNA, at the number 7 nitrogen atom of the imidazole ring.

It is used to treat various types of cancer and some autoimmune disorders. It is a "prodrug"; it is converted in the liver to active forms that have chemotherapeutic activity.

The main use of cyclophosphamide is with other chemotherapy agents in the treatment of lymphomas, some forms of brain cancer, leukemia^[3] and some solid tumors.^[4] It is a chemotherapy drug that works by slowing or stopping cell growth.

Cyclophosphamide also decreases the immune system's response to various diseases and conditions. Therefore, it has been used in various non-neoplastic autoimmune diseases where disease-modifying antirheumatic drugs (DMARDs) have been ineffective. For example, systemic lupus erythematosus with severe lupus nephritis^[5] may respond to pulsed cyclophosphamide (in 2005, however, standard treatment for lupus nephritis changed to mycophenolic acid from cyclophosphamide). Cyclophosphamide is also used to treat minimal change disease,^[6] severe rheumatoid arthritis,^[7] Wegener's granulomatosis^[8] (with trade name Cytoxan), and multiple sclerosis^[9] (with trade name Revimmune).