Abstract Clinical use of doxorubicin (Dox) is limited by cumulative myelo- and cardiotoxicity. This research focuses on the detailed characterization of PhAc-ALGP-Dox, a targeted tetrapeptide prodrug with a unique dual-step activation mechanism, designed to circumvent Dox-related toxicities and is ready for upcoming clinical investigation. Coupling Dox to a phosphonoacetyl (PhAc)-capped tetrapeptide forms the cell-impermeable, inactive compound, PhAc-ALGP-Dox. After extracellular cleavage by tumor-enriched thimet oligopeptidase-1 (THOP1), a cell-permeable but still biologically inactive dipeptide-conjugate is formed (GP-Dox), which is further processed intracellularly to Dox by fibroblast activation protein-alpha (FAPα) and/or dipeptidyl peptidase-4 (DPP4). In vitro, PhAc-ALGP-Dox is effective in various 2D- and 3D-cancer models, while showing improved safety toward normal epithelium, hematopoietic progenitors, and cardiomyocytes. In vivo, these results translate into a 10-fold higher tolerability and 5-fold greater retention of Dox in the tumor microenvironment compared with the parental drug. PhAc-ALGP-Dox demonstrates 63% to 96% tumor growth inhibition in preclinical models, an 8-fold improvement in efficacy in patient-derived xenograft (PDX) models, and reduced metastatic burden in a murine model of experimental lung metastasis, improving survival by 30%. The current findings highlight the potential clinical benefit of PhAc-ALGP-Dox, a targeted drug-conjugate with broad applicability, favorable tissue biodistribution, significantly improved tolerability, and tumor growth inhibition at primary and metastatic sites in numerous solid tumor models.