Pentostatin is primarily used in the treatment of hairy cell leukemia, a rare type of blood cancer. It works by inhibiting the enzyme adenosine deaminase, which is crucial for the survival of certain cancer cells, leading to their destruction. Additionally, it is sometimes employed in the management of other lymphoid malignancies and in conditioning regimens for bone marrow transplantation. Its ability to suppress the immune system also makes it valuable in treating graft-versus-host disease in transplant patients. The drug is administered intravenously under strict medical supervision due to its potent effects and potential side effects.