BMS-986104 is a S1P1R modulator drug candidate under development and has been evaluated in Phase I clinical trials. BMS-986104 functions as a prodrug and undergoes enzymatic transformations in vivo to form the pharmacologically active phosphate drug, BMS-986104-P. Here, we report approaches to overcome the stability, solubility and extraction challenges in developing a sensitive, accurate and rugged LC–MS/MS method for the simultaneous quantification of the phosphate drug and its prodrug in blood lysate. An effective stabilization strategy using a cocktail of phosphatase and kinase inhibitors was developed to ensure the stability of both analytes during sample collection, storage, and processing. A combination of surfactant (CHAPS) and weak base (Tris) was found to be able to effectively improve the solubilization of the phosphate drug. The blood lysate samples were extracted by protein precipitation followed by solid-phase extraction using an Oasis HLB 96-well SPE plate. The method achieved acceptable matrix effect and recovery for the two analytes that have very different chemical properties. Stable-isotope labeled D6-BMS-986104 and D13-BMS-986104-P were utilized as the internal standards. Chromatographic separation was achieved using isocratic conditions on an Acquity UPLC BEH C18 analytical column. The two analytes and their internal standards were detected by positive ion electrospray tandem mass spectrometry. The calibration curves, which ranged from 2.00 to 2000ng/mL for BMS-986104 and 4.00 to 4000ng/mL for BMS-986104-P, were fitted to a 1/x2 weighted linear regression model. The intra-assay precision was within ±5.0% CV, inter-assay precision was within ±4.9% CV, and the assay accuracy was within ±5.8% of the nominal values for both analytes in rat blood lysate. The method was validated and successfully applied to support multiple pre-clinical toxicity studies.