Viruses are highly efficient nanoscale machines that not only target specific cell types but also penetrate the cell membrane to deliver the virus genome into the cytoplasm. Recently, we described a simple and highly scalable method to modify the surface of nanoparticles with the membranes of murine leukemia viruses (MLV) and showed that these can deliver a simple cargo into receptor bearing cells (Deniger et al., Nano Lett. 2006 Nov;6(l 1):2414-21). However, the entry route and subcellular destination of the nanocargoes was not determined. Here we use state-of-the-art microscopy techniques on live cells to visualize the penetration and delivery of the cargo to different subcellular compartments. We show that the MLV membrane-coated nanoparticles are specifically captured on the surface of receptor bearing cells from which they are rapidly taken up into early endosomes. We predict that coating of nanoparticle cargoes with virus envelopes will create a biologically compatible capsule to enhance circulation and delivery of nanoscale drug formulations to specific cells and subcellular compartments.