A novel strategy to improve the therapeutic index of chemotherapy has been developed by the integration of nanotechnology with phage technique. The objective of this study was to combine phage display, identifying tumor-targeting ligands, with a liposomal nanocarrier for targeted delivery of doxorubicin. Following the proof of concept in cell-based experiments, this study focused on in vivo assessment of antitumor activity and potential side-effects of phage fusion protein-modified liposomal doxorubicin. MCF-7-targeted phage-Doxil treatments led to greater tumor remission and faster onset of antitumor activity than the treatments with non-targeted formulations. The enhanced anticancer effect induced by the targeted phage-Doxil correlated with an improved tumor accumulation of doxorubicin. Tumor sections consistently revealed enhanced apoptosis, reduced proliferation activity and extensive necrosis. Phage-Doxil-treated mice did not show any sign of hepatotoxicity and maintained overall health. Therefore, MCF-7-targeted phage-Doxil seems to be an active and tolerable chemotherapy for breast cancer treatment.