We have developed and tested a liposomal nanocomplex system, which contains Gd-DTPA as a payload and transferrin on the surface, as a tumor specific targeting MRI contrast agent for studying prostate cancer tumors in mice. In vivo, the probe significantly enhanced the MRI signal. The image contrast between the peripheral region of the tumor and the non-involved muscle was nearly 50% higher two hours after administration of the nanocomplex. The liposomal nanocomplex increased the amount of Gd accumulated in tumors by factor 2.8 compared to that accumulated by using Magnevist alone. Moreover, the heterogeneous MRI image features correlate well with the tumor pathology. The image enhancement patterns can be used for cancer prognosis and non-invasive monitoring of the response to therapy.