Tumor endothelial marker 1 (TEM1) is a protein predominantly expressed on the cell surface of endothelial cells in newly developing blood vessels and on tumor cells. It is therefore ideally suited as a target for anti-angiogenic tumor therapy. Using phage display technology a single chain antibody fragment (scFv-CM6) was isolated that specifically binds to the extracellular part of TEM1. Antibody specificity was determined in ELISA, by Western analysis, fluorescence microscopy and flow cytometry performed with TEM1-expressing cells. ScFv-CM6 was further functionalized and coupled to liposomes. Such immunoliposomes loaded with the cytotoxic drug N4-octadecyl-1-beta-D-arabinofuranosylcytosine-(5'-5')-3'-C-ethinylcytidine showed increased binding affinity and up to 80% higher cytotoxic activity towards TEM1-expressing IMR-32 tumor cells compared with control liposomes.