Targeted drug delivery systems that combine imaging and therapeutic modalities in a single macromolecular construct may offer advantages in the development and application of nanomedicines. To incorporate the unique optical properties of luminescent quantum dots (QDs) into immunoliposomes for cancer diagnosis and treatment, we describe the synthesis, biophysical characterization, tumor cell-selective internalization, and anticancer drug delivery of QD-conjugated immunoliposome-based nanoparticles (QD-ILs). Pharmacokinetic properties and in vivo imaging capability of QD-ILs were also investigated. Freeze-fracture electron microscopy was used to visualize naked QDs, liposome controls, nontargeted QD-conjugated liposomes (QD-Ls), and QD-ILs. QD-ILs prepared by insertion of anti-HER2 scFv exhibited efficient receptor-mediated endocytosis in HER2-overexpressing SK-BR-3 and MCF-7/HER2 cells but not in control MCF-7 cells as analyzed by flow cytometry and confocal microscopy. In contrast, nontargeted QD-Ls showed minimal binding and uptake in these cells. Doxorubicin-loaded QD-ILs showed efficient anticancer activity, while no cytotoxicity was observed for QD-ILs without chemotherapeutic payload. In athymic mice, QD-ILs significantly prolonged circulation of QDs, exhibiting a plasma terminal half-life ( t 1/2) of approximately 2.9 h as compared to free QDs with t 1/2 < 10 min. In MCF-7/HER2 xenograft models, localization of QD-ILs at tumor sites was confirmed by in vivo fluorescence imaging.