pH-sensitive liposomes undergo rapid destabilization under mild acidic conditions found in endocytotic vesicles. Their application is however limited due to their rapid clearance from circulation by the reticulo-endothelial system and researchers have therefore used pH sensitive liposomes sterically stabilized by polyethylene glycol (PEG) molecules on the surface of liposomes. The goal of this study is to bring bio-functionality to pH-sensitive stealth liposomes in order to facilitate their potential use as a targeted drug delivery agent. To improve the selectivity of these nano-particles we included a targeting moiety, PR_b which specifically recognizes and binds to integrin α₅β₁ expressing cells. PR_b is a novel fibronectin mimetic peptide sequence, designed in our lab, that mimics the cell adhesion domain of fibronectin, and includes both RGDSP (the primary recognition site for α₅β₁) and PHSRN (the synergy site for α₅β₁) connected with a (SG)₅ linker. Integrin α₅β₁ is expressed on several types of cancer cells, including colon cancer, and plays an important role in tumor growth and metastasis. Different liposomal formulation encapsulating calcein at self-quenching concentration have been evaluated. Release profiles will be discussed as a function of lipid composition, peptide concentration, pH, and time. Our data has been normalized to account for the changes in fluorescent properties of calcein due to pH and time. The pH-sensitive peptide-functionalized stealth liposomes have further been characterized in-vitro with CT26 colon cancer cell, and flow cytometry and confocal imaging data will be presented. Our studies demonstrate that peptide-functionalized pH-sensitive targeted delivery systems have the potential to deliver water soluble chemo-therapeutic agents directly to cancer cells, in an efficient and specific manner.