Current therapeutic modalities for the treatment of systemic sclerosis (SSc) have significant limitations. The window of opportunity to prevent tissue fibrosis and irreversible damage occurs during the early inflammatory phase of this condition. A drug that we believe has promise to exert a desired effect in early SSc is cyclophosphamide (CYC). However, there are only a few published reports regarding the use of cytotoxic immunosuppressive medications at the onset of the illness. The goal of this study was to test the efficacy and toxicity of CYC in patients with early diffuse SSc. The study design was a randomized, unblinded, 18 months per patient trial with a comparison group that received azathioprine (AZ). Thirty patients were assigned to receive oral CYC (2 mg/kg daily for 12 months and then maintained on 1 mg/kg daily) and 30 patients were assigned to receive oral AZ (2.5 mg/kg daily for 12 months and then maintained on 2 mg/kg daily). During first 6 months of the trial, the patients also received prednisolone, which was started at a dosage of 15 mg daily and tapered to zero by the end of the sixth month. After treatment there was a statistically significant improvement in the modified Rodnan skin score (MRSS), attack frequency of Raynaud's phenomenon (RP), and erythrocyte sedimentation rate (ESR) in the CYC-group, but not in the AZ-group. The forced vital capacity (FVC) and carbon monoxide diffusing capacity (DLCO) did not change after treatment in the CYC-group, but statistically significantly worsened in the AZ-group. No life-threatening or irreversible adverse reactions were observed in either group. This study showed that CYC is a promising disease modifying medication for SSc as it exhibited a positive influence on the evolution of disease.