Cyclic heptapeptide cyclo(FΦRRRRQ) (cFΦR4, where Φ is l-2-naphthylalanine) was recently found to be efficiently internalized by mammalian cells. In this study, its mechanism of internalization was investigated by perturbing various endocytic events through the introduction of pharmacologic agents and genetic mutations. The results show that cFΦR4 binds directly to membrane phospholipids, is internalized into human cancer cells through endocytosis, and escapes from early endosomes into the cytoplasm. Its cargo capacity was examined with a wide variety of molecules, including small-molecule dyes, linear and cyclic peptides of various charged states, and proteins. Depending on the nature of the cargos, they may be delivered by endocyclic (insertion of cargo into the cFΦR4 ring), exocyclic (attachment of cargo to the Gln side chain), or bicyclic approaches (fusion of cFΦR4 and cyclic cargo rings). The overall delivery efficiency (i.e., delivery of cargo into the cytoplasm and nucleus) of cFΦR4 was 4-12-fold higher than those of nonaarginine, HIV Tat-derived peptide, or penetratin. The higher delivery efficiency, coupled with superior serum stability, minimal toxicity, and synthetic accessibility, renders cFΦR4 a useful transporter for intracellular cargo delivery and a suitable system for investigating the mechanism of endosomal escape.