ABSTRACT PSI-352938 is a novel cyclic phosphate prodrug of β- d -2′-deoxy-2′-α-fluoro-2′-β- C -methylguanosine-5′-monophosphate with potent anti-HCV activity. In order to inhibit the NS5B RNA-dependent RNA polymerase, PSI-352938 must be metabolized to the active triphosphate form, PSI-352666. During in vitro incubations with PSI-352938, significantly larger amounts of PSI-352666 were formed in primary hepatocytes than in clone A hepatitis C virus (HCV) replicon cells. Metabolism and biochemical assays were performed to define the molecular mechanism of PSI-352938 activation. The first step, removal of the isopropyl group on the 3′,5′-cyclic phosphate moiety, was found to be cytochrome P450 (CYP) 3A4 dependent, with other CYP isoforms unable to catalyze the reaction. The second step, opening of the cyclic phosphate ring, was catalyzed by phosphodiesterases (PDEs) 2A1, 5A, 9A, and 11A4, all known to be expressed in the liver. The role of these enzymes in the activation of PSI-352938 was confirmed in primary human hepatocytes, where prodrug activation was reduced by inhibitors of CYP3A4 and PDEs. The third step, removal of the O ⁶ -ethyl group on the nucleobase, was shown to be catalyzed by adenosine deaminase-like protein 1. The resulting monophosphate was consecutively phosphorylated to the diphosphate and to the triphosphate PSI-352666 by guanylate kinase 1 and nucleoside diphosphate kinase, respectively. In addition, formation of nucleoside metabolites was observed in primary hepatocytes, and ecto-5′-nucleotidase was able to dephosphorylate the monophosphate metabolites. Since CYP3A4 is highly expressed in the liver, the CYP3A4-dependent metabolism of PSI-352938 makes it an effective liver-targeted prodrug, in part accounting for the potent antiviral activity observed clinically.