BACKGROUND: Discovery of tumor-selective antibodies or antibody fragments is a promising approach for delivering therapeutic agents to antigen over-expressing cancers. Therefore it is important to develop methods for the identification of target- and function specific antibodies for effective drug delivery. Here we describe a highly selective and sensitive method for characterizing the internalizing potential of multivalently displayed antibodies or ligands conjugated to liposomes into tumor cells. The assay requires minute amounts of histidine-tagged ligand and relies on the non-covalent coupling of these antibodies to fluorescent liposomes containing a metal ion-chelating lipid. Following incubation of cells with antibody-conjugated liposomes, surface bound liposomes are gently removed and the remaining internalized liposomes are quantitated based on fluorescence in a high throughput manner. We have termed this methodology "Chelated Ligand Internalization Assay", or CLIA. RESULTS: The specificity of the assay was demonstrated with different antibodies to the ErbB-2 and EGF receptors. Antibody-uptake correlated with receptor expression levels in tumor cell lines with a range of receptor expression. Furthermore, Ni-NTA liposomes containing doxorubicin were used to screen for the ability of antibodies to confer target-specific cytotoxicity. Using an anti-ErbB2 single chain Fv (scFv) (F5) antibody, cytotoxicity could be conferred to ErbB2-overexpressing cells; however, a poly(ethylene glycol)-linked lipid (DSPE-PEG-NTA-Ni) was necessary to allow for efficient loading of the drug and to reduce nonspecific drug leakage during the course of the assay. CONCLUSION: The CLIA method we describe here represents a rapid, sensitive and robust assay for the identification and characterization of tumor-specific antibodies capable of high drug-delivery efficiency when conjugated to liposomal nanocarriers.