Quantum dots (QDs) are attracting intense interest as fluorescence labeling agents for biomedical imaging because biocompatible coatings and relatively nontoxic rare earth metal QDs have emerged as possible options. QD photoemissions are bright, of narrow wavelength range, and very stable. We sought to encapsulate QDs within targeted PEGylated liposomes to reduce their propensity for liver uptake and to amplify the already strong QD emission signal. A novel lipid-QD conjugate initialized a process by which lipids in solution coalesced around the QDs. The liposomal structure was confirmed with size measurements, SEM, and IR spectroscopy. PEGylated QD liposomes injected into a xenograft tumor model largely cleared from the body within 24 h. Residual liver labeling was low. Targeted QD liposomes exhibited robust tumor labeling compared with controls. This study highlights the potential of these near IR emitting QD liposomes for preclinical/clinical applications.