Targeted delivery represents a promising approach for the development of safer and more effective therapeutics for oncology applications. Although macromolecules accumulate nonspecifically in tumors through the enhanced permeability and retention (EPR) effect, previous studies using nanoparticles to deliver chemotherapeutics or siRNA demonstrated that attachment of cell-specific targeting ligands to the surface of nanoparticles leads to enhanced potency relative to nontargeted formulations. Here, we use positron emission tomography (PET) and bioluminescent imaging to quantify the in vivo biodistribution and function of nanoparticles formed with cyclodextrin-containing polycations and siRNA. Conjugation of 1,4,7,10-tetraazacyclododecane-1,4,7,10-tetraacetic acid to the 5′ end of the siRNA molecules allows labeling with 64 Cu for PET imaging. Bioluminescent imaging of mice bearing luciferase-expressing Neuro2A s.c. tumors before and after PET imaging enables correlation of functional efficacy with biodistribution data. Although both nontargeted and transferrin-targeted siRNA nanoparticles exhibit similar biodistribution and tumor localization by PET, transferrin-targeted siRNA nanoparticles reduce tumor luciferase activity by ≈50% relative to nontargeted siRNA nanoparticles 1 d after injection. Compartmental modeling is used to show that the primary advantage of targeted nanoparticles is associated with processes involved in cellular uptake in tumor cells rather than overall tumor localization. Optimization of internalization may therefore be key for the development of effective nanoparticle-based targeted therapeutics.