Integrin alpha(5)beta(1) is expressed on several types of cancer cells, including prostate cancer, and plays an important role in tumor growth and metastasis. The ability to target the integrin alpha(5)beta(1) using an appropriate drug delivery nanovector can significantly help in inhibiting tumor growth, reducing tumor metastasis, and decreasing deleterious side effects associated with different cancer therapies. The goal of this study is to design peptide-functionalized stealth liposomes (liposomes covered with polyethylene glycol (PEG)) that will specifically target the integrin alpha(5)beta(1) and effectively release their encapsulated load intracellularly. The targeting moiety is the PR_b peptide, that has been designed in our lab, and has been shown to specifically recognize and bind to alpha(5)beta(1) expressing cells. The peptide-functionalized nanoparticles have been characterized with NMR, TEM, and DLS, as well as in vitro studies with prostate cancer cells. In this study we have demonstrated that by optimizing the amount of PEG and PR_b on the liposomal interface we can engineer nanovectors that bind to human prostate cancer cells in a specific manner and are internalized through alpha(5)beta(1)-mediated endocytosis. RGD-targeted stealth liposomes bind to prostate cancer cells and internalize, but are less specific and have much lesser efficiency than PR_b targeted stealth liposomes. We have further shown that the PR_b liposomes upon internalization are capable of releasing their therapeutic payload intracellularly. The proposed targeted delivery system has a great potential to deliver therapeutic agents directly to cancer cells, in an efficient and specific manner.