Postimplantation rat embryos (Day 10) were exposed in vitro to teratogenic concentrations of 4-hydroperoxycyclophosphamide, an activated form of cyclophosphamide, and phosphoramide mustard, the major teratogenic metabolite of cyclophosphamide. Following a 5-h exposure to these agents, drug-induced DNA damage was assessed by alkaline elution. Both drugs induced detectable DNA cross-linking at teratogenic concentrations. Alkaline elution combined with proteinase K digestion indicated that approximately half of the DNA cross-linking was DNA-DNA cross-linking and the other half was DNA-protein cross-linking. In addition to DNA cross-linking, phosphoramide mustard produced DNA strand breaks and/or alkaline labile sites. However, 4-hydroperoxycyclophosphamide did not produce detectable DNA strand breaks or alkaline labile sites. Our data also indicate that the induction of abnormal morphogenesis by 4-hydroperoxycyclophosphamide and phosphoramide mustard is correlated with drug-induced DNA cross-linking.