Nucleosides are currently used in the treatment of many infections caused by viruses and against various cancers. The principal historic limitations of the development of nucleoside drugs that either directly inhibit DNA or RNA polymerases or that inhibit RNA and DNA replication by virtue of their ability to act as alternative substrates for these polymerases, have been the requirements for cellular penetration of the uncharged nucleosides and their subsequent biological conversion to the pharmacologically active nucleoside triphosphate (NTP) species. Unfortunately, intracellular phosphorylation of nucleosides frequently results in toxic by-products, limiting the drug dose that can be administered. In the past few decades, intensive research has provided insights into the nature of chemical and biological requirements associated with the in vitro selective delivery of nucleotides into cells. As such, cleavable protecting groups represent a very powerful tool to increase not only drug delivery but also bioavailability. This review presents an update of prodrug strategies in which the most prominent masking groups currently in use for the treatment of cancer and viral diseases, their stability, toxicities and biological activities are discussed. In particular, the following prodrugs: S-acyl-2-thioethyl (SATE), pivaloyloxymethyl (POM), isopropyloxycarbonyloxymethyl (POC), amino acid esters, and polyethylene glycol drug conjugates will be addressed.