In an effort to develop new agents and molecular targets for the treatment of cancer, aspargine-glycine-arginine (NGR)-targeted liposomal doxorubicin (TVT-DOX) is being studied. The NGR peptide on the surface of liposomal doxorubicin (DOX) targets an aminopeptidase N (CD13) isoform, specific to the tumor neovasculature, making it a promising strategy. To further understand the molecular mechanisms of action, we investigated cell binding, kinetics of internalization as well as cytotoxicity of TVT-DOX in vitro. We demonstrate the specific binding of TVT-DOX to CD13-expressing endothelial [human umbilical vein endothelial cells (HUVEC) and Kaposi sarcoma-derived endothelial cells (SLK)] and tumor (fibrosarcoma, HT-1080) cells in vitro. Following binding, the drug was shown to internalize through the endosomal pathway, eventually leading to the localization of doxorubicin in cell nuclei. TVT-DOX showed selective toxicity toward CD13-expressing HUVEC, sparing the CD13-negative colon-cancer cells, HT-29. Additionally, the nontargeted counterpart of TVT-DOX, Caelyx, was less cytotoxic to the CD13-positive HUVECs demonstrating the advantages of NGR targeting in vitro. The antitumor activity of TVT-DOX was tested in nude mice bearing human prostate-cancer xenografts (PC3). A significant growth inhibition (up to 60%) of PC3 tumors in vivo was observed. Reduction of tumor vasculature following treatment with TVT-DOX was also apparent. We further compared the efficacies of TVT-DOX and free doxorubicin in the DOX-resistant colon-cancer model, HCT-116, and observed the more pronounced antitumor effects of the TVT-DOX formulation over free DOX. The potential utility of TVT-DOX in a variety of vascularized solid tumors is promising.