Don protective gloves to protect yourself from sharp edges. Inspect the corner of the wall abutting the damaged siding for end or corner caps that secure it in place.
Slide a hammer claw or a pry bar around the nail in the cap to loosen and pry it out. Pull the end cap downward or out to remove it.
Insert a pry bar under the lower edge of the piece of masonite siding you intend to remove. Tap it end lightly with a hammer to drive it underneath.
Push the pry bar down to prise the Masonite siding 1 to 2 inches away from the wall. Set the pry bar aside and push the siding to force it back against the wall, thereby popping up the nails holding it in place.
Remove the nails with a pry bar. Repeat this process along the length of the siding, revealing and removing the nails. Pry the loose siding away from the wall with the pry bar.