Cyclophosphamide is a prodrug, meaning it requires metabolic activation to become effective. Once administered, it is converted in the liver to its active form, which then targets rapidly dividing cells, such as cancer cells. By binding to the DNA, it forms cross-links between DNA strands, preventing the cell from dividing and leading to cell death. This mechanism makes it effective against a variety of cancers, including lymphoma, leukemia, breast cancer, and ovarian cancer.