Granulation tissue was produced in rats by subcutaneous implantation of viscose cellulose sponges. Cyclophosphamide 10 mg/kg was given daily intraperitoneally to 15 rats from the day of sponge implantation. Fifteen rats served as pair‐fed controls, and 15 rats served as non‐starved controls. After 14 days of treatment the animals were decapitated. Groups of 3 rats were given 50 μci 14C‐proline intraperitoneally 1, 3, 6, 12, or 24 hours before death. The aorta, skin, and granulation tissue were examined. Cyclophosphamide caused no effect on collagen of the aorta, while in skin, the only detectable effect was a decrease in 14C‐OH‐proline biosynthesis. In granulation tissue, cyclophosphamide caused a fall in the dry weight, a decrease in 14C‐proline uptake and 14C‐OH‐proline synthesis, as well as an increase in the alpha‐amino nitrogen to OH‐proline ratio in purified collagen. These results indicate that cyclophosphamide inhibits the synthesis of proteins, including collagen, and inhibits the hydroxylation of proline in collagen. No effect of cyclophosphamide could be detected on the amount of salt soluble OH‐proline or on collagen cross‐linking. The registered effects of cyclophosphamide on granulation tissue is probably of importance with regard to the anti‐inflammatory action of cyclophosphamide. This action as well as the tissue differences in the sensitivity of cyclophosphamide may be of relevance to the clinical application of cytostatics in rheumatological diseases.