Anti-HER2 immunoliposomes (ILs) have been constructed by conjugation of Fab' fragments of recombinant humanized monoclonal antibody rhuMAbHER2 to small sterically stabilized unilamellar liposomes, to create a targeted drug delivery vehicle for the treatment of HER2 (c-erbB-2, neu)-overexpressing cancers. Parameters affecting in vitro binding and internalization of ILs include liposome composition, Fab' linkage site and Fab' density. Anti-HER2 ILs have been constructed to optimize intracellular drug delivery. Doxorubicin (dox)-loaded ILs are highly stable and exhibit prolonged circulation in rats. In nude mice bearing HER2-overexpressing tumor xenografts, anti-HER2 ILs administered i.v. resulted in efficient tumor localization, with penetration of the ILs throughout the tumor mass and accumulation within tumor cells. In contrast, non-targeted liposomes resulted in extracellular tumor accumulation only. In multiple HER2-overexpressing human breast tumor xenograft models, treatment with dox-loaded anti-HER2 ILs produces significantly increased antitumor cytotoxicity as compared to free dox or dox-loaded non-targeted liposomes and significantly less systemic toxicity than free dox. To explore further the intracellular delivery advantages of ILs, anti-HER2 ILs bearing cationic lipids are being developed for nucleic acid delivery. These cationic immunoliposomes mediate efficient and specific transfection of target cells with reporter genes, as well as intracellular delivery of labeled oligonucleotides. Thus, anti-HER2 ILs represent an efficient and feasible strategy to achieve targeted intracellular delivery of therapeutic agents.