A biocompatible, dextran coated superparamagnetic iron oxide particle was derivatized with a peptide sequence from the HIV-tat protein to improve intracellular magnetic labeling of different target cells. The conjugate had a mean particle size of 41 nm and contained an average of 6.7 tat peptides. Derivatized particles were internalized into lymphocytes over 100-fold more efficiently than nonmodified particles, resulting in up to 12.7 x 10(6) particles/cell. Internalized particles localized in cytoplasm and nuclear compartments as demonstrated by fluorescence microscopy and immunohistochemistry. Labeled cells were highly magnetic, were detectable by NMR imaging, and could be retained on magnetic separation columns. The described method has potential applications for in vivo tracking of magnetically labeled cells by MR imaging and for recovering intracellularly labeled cells from organs.