Most human tumours over-express receptors for growth factors and peptide hormones, which are being increasingly studied as a means to selectively deliver cytotoxic agents. An example being the transferrin receptor (TfR, CD71). Here, we studied expression levels and location of TfR in different lung epithelial cell types (i.e., bronchial and alveolar epithelial cells) by flow-cytometry and confocal laser scanning microscopy (CLSM). Furthermore, we assessed uptake levels and cytotoxicity of transferrin (Tf)-conjugated liposomes in vitro. TfR was found to be expressed at a significantly higher level in bronchial epithelial cells compared with their alveolar counterparts. Cells of cancerous origin (i.e., A549 cell line) showed a higher TfR expression level than healthy alveolar epithelial type II cells in primary culture. CLSM revealed TfR to be located primarily at the basolateral aspect of cells, with the exception of cells undergoing mitotic proliferation, which also showed TfR at their apical membranes, due to their loss of cell polarity. Higher expression levels of TfR correlated well with enhanced uptake of Tf-liposomes and increased levels of cytotoxicity. Liposome uptake was temperature-dependent and inhibitable by excess free Tf. Tf-conjugated liposomes appear as good candidates for an approach to deliver cytostatic drugs to sites of lung cancer by inhalation.