We investigated the in vitro and in vivo properties of DNA/transferrin-polyethylenimine (800 kDa) complexes before and after covalent coupling of poly(ethylene glycol) (PEG). Upon incubation with plasma, the positively charged non-PEGylated DNA complexes form aggregates. Plasma proteins such as IgM, fibrinogen, fibronectin and complement C3 were found to bind to non-PEGylated DNA complexes. At DNA concentrations relevant for in vivo gene delivery a strong aggregation of erythrocytes was also observed. PEGylation of the complexes strongly reduces plasma protein binding and erythrocyte aggregation. Furthermore, PEGylated complex size was stabilized and had a reduced surface charge. Prolonged circulation in the blood of the PEGylated complexes was also observed when injected intravenously. In tumor bearing mice, application of non-PEGylated complexes through the tail vein resulted in reporter gene expression in tail and lung, but severe toxicity was observed in some mice. In contrast, PEGylated complexes mediated reporter gene transfer to the tumor without significant toxicity.