Specific targeting of tumors by combined delivery of drugs and of imaging agents represents an attractive strategy for treatment of cancer. The aim of the present study was to investigate whether neural cell adhesion molecule (NCAM)-targeted liposomes may enhance drug delivery and allow magnetic resonance imaging (MRI) in a severe combined immunodeficient mouse model of NCAM-positive Kaposi's sarcoma. NCAM-binding peptide-coated liposomes loaded with both doxorubicin and a lipophilic gadolinium (Gd) derivative were generated. NCAM-targeted liposomes induced an enhanced in vitro doxorubicin internalization within Kaposi's cells as detected by MRI with respect to untargeted polyethylene glycol liposomes. Internalization resulted in enhanced apoptosis. In vivo weekly administration of NCAM-targeted liposomes containing 5 mg/kg doxorubicin for 4 consecutive weeks induced a significant reduction of tumor mass and vascularization and enhanced cell necrosis and apoptosis with respect to untargeted liposomes. These effects were associated with an enhanced concentration of doxorubicin within the tumor and a reduced systemic toxicity of doxorubicin. By electron microscopy, NCAM-targeted liposomes were detected mainly within tumor cells whereas the untargeted liposomes were mainly accumulated in the extracellular space. Gd-labeled liposomes allowed the MRI visualization of drug delivery in the tumor region. The intensity of MRI signal was partially hampered by the "quenching" of the attainable relaxation enhancement on endosomal entrapment of the Gd-labeled liposomes. In conclusion, targeting NCAM may be a suitable strategy for specific drug delivery and imaging by liposomes in NCAM-expressing tumors. Moreover, treatment with NCAM-targeted liposomes showed enhanced therapeutic effect and reduced toxicity with respect to untargeted liposomes.