A novel bimodal fluorescent and paramagnetic liposome is described for cellular labeling. In this study, we show the synthesis of a novel gadolinium lipid, Gd.DOTA.DSA, designed for liposomal cell labeling and tumor imaging. Liposome formulations consisting of this lipid were optimized in order to allow for maximum cellular entry, and the optimized formulation was used to label HeLa cells in vitro. The efficiency of this novel bimodal Gd-liposome formulation for cell labeling was demonstrated using both fluorescence microscopy and magnetic resonance imaging (MRI). The uptake of Gd-liposomes into cells induced a marked reduction in their MRI T 1 relaxation times. Fluorescence microscopy provided concomitant proof of uptake and revealed liposome internalization into the cell cytosol. The optimized formulation was also found to exhibit minimal cytotoxicity and was shown to have capacity for plasmid DNA (pDNA) transfection. A further second novel neutral bimodal Gd-liposome is described for the labeling of xenograft tumors in vivo utilizing the enhanced permeation and retention effect (EPR). Balb/c nude mice were inoculated with IGROV-1 cells, and the resulting tumor was imaged by MRI using these in vivo Gd-liposomes formulated with low charge and a poly(ethylene glycol) (PEG) calyx for long systemic circulation. These Gd-liposomes which were less than 100 nm in size were shown to accumulate in tumor tissue by MRI, and this was also verified by fluorescence microscopy of histology samples. Our in vivo tumor imaging results demonstrate the effectiveness of MRI to observe passive targeting of long-term circulating liposomes to tumors in real time, and allow for MRI directed therapy, wherein the delivery of therapeutic genes and drugs to tumor sites can be monitored while therapeutic effects on tumor mass and/or size may be simultaneously observed, quantitated, and correlated.