Nanoparticles have been proposed as carriers for drugs, genes and therapies to treat various diseases(1,2). Many strategies have been developed to target nanomaterials to specific or over-expressed receptors in diseased cells, and these typically involve functionalizing the surface of nanoparticles with proteins, antibodies or other biomolecules. Here, we show that the targeting ability of such functionalized nanoparticles may disappear when they are placed in a biological environment. Using transferrin-conjugated nanoparticles, we found that proteins in the media can shield transferrin from binding to both its targeted receptors on cells and soluble transferrin receptors. Although nanoparticles continue to enter cells, the targeting specificity of transferrin is lost. Our results suggest that when nanoparticles are placed in a complex biological environment, interaction with other proteins in the medium and the formation of a protein corona(3,4) can 'screen' the targeting molecules on the surface of nanoparticles and cause loss of specificity in targeting.