We describe a novel 3'-OH unblocked reversible terminator with the potential to improve accuracy and read-lengths in next-generation sequencing (NGS) technologies. This terminator is based on 5-hydroxymethyl-2'-deoxyuridine triphosphate (HOMedUTP), a hypermodified nucleotide found naturally in the genomes of numerous bacteriophages and lower eukaryotes. A series of 5-(2-nitrobenzyloxy)methyl-dUTP analogs (dU.I-dU.V) were synthesized based on our previous work with photochemically cleavable terminators. These 2-nitrobenzyl alkylated HOMedUTP analogs were characterized with respect to incorporation, single-base termination, nucleotide selectivity and photochemical cleavage properties. Substitution at the α-methylene carbon of 2-nitrobenzyl with alkyl groups of increasing size was discovered as a key structural feature that provided for the molecular tuning of enzymatic properties such as single-base termination and improved nucleotide selectivity over that of natural nucleotides. 5-[(S)-α-tert-Butyl-2-nitrobenzyloxy]methyl-dUTP (dU.V) was identified as an efficient reversible terminator, whereby, sequencing feasibility was demonstrated in a cyclic reversible termination (CRT) experiment using a homopolymer repeat of ten complementary template bases without detectable UV damage during photochemical cleavage steps. These results validate our overall strategy of creating 3'-OH unblocked reversible terminator reagents that, upon photochemical cleavage, transform back into a natural state. Modified nucleotides based on 5-hydroxymethyl-pyrimidines and 7-deaza-7-hydroxymethyl-purines lay the foundation for development of a complete set of four reversible terminators for application in NGS technologies.