This present invention relates to a stable lyophilized composition of Cyclophosphamide. The said stable lyophilized composition of Cyclophosphamide provides an improved moisture content than the lyophilized Cyclophosphamide compositions obtained by the conventional lyophilization method. Further, the invention relates to a process for preparation of the said stable lyophilized composition of Cyclophosphamide, wherein the said process comprises controlled lyophilization with freezing and annealing at a temperature above 0 °C.