It is estimated that about 10% of the drugs approved worldwide can be classified as prodrugs. Prodrugs, which have no or poor biological activity, are chemically modified versions of a pharmacologically active agent, which must undergo transformation in vivo to release the active drug. They are designed in order to improve the physicochemical, biopharmaceutical and/or pharmacokinetic properties of pharmacologically potent compounds. This article describes the basic functional groups that are amenable to prodrug design, and highlights the major applications of the prodrug strategy, including the ability to improve oral absorption and aqueous solubility, increase lipophilicity, enhance active transport, as well as achieve site-selective delivery. Special emphasis is given to the role of the prodrug concept in the design of new anticancer therapies, including antibody-directed enzyme prodrug therapy (ADEPT) and gene-directed enzyme prodrug therapy (GDEPT).