Polymeric nanoparticles displaying tumor necrosis factor on their surface (TNF nanocytes) are useful carrier systems capable of mimicking the bioactivity of membrane-bound TNF. Thus, TNF nanocytes are potent activators of TNF receptor 1 and 2 leading to a striking enhancement of apoptosis. However, in vivo applications are hampered by potential systemic toxicity. Here, using TNF nanocytes as a model system, we developed a procedure to generate targeted lipid-coated particles (TLP) in which TNF activity is shielded. The TLPs generated here are composed of an inner single-chain TNF (scTNF)-functionalized, polymeric nanoparticle core surrounded by a lipid coat endowed with polyethylene glycol (PEG) for sterical stabilization and a single-chain Fv (scFv) fragment for targeting. Using a scFv directed against the tumor stroma marker fibroblast activation protein (FAP) we show that TLP and scTNF-TLP specifically bind to FAP-expressing, but not to FAP-negative cells. Lipid coating strongly reduced nonspecific binding of particles and scTNF-mediated cytotoxicity towards FAP-negative cells. In contrast, an increased cytotoxicity of TLP was observed for FAP-positive cells. Thus, through liposome encapsulation, nanoparticles carrying bioactive molecules, which are subject to nonselective uptake and activity towards various cells and tissues, can be converted into target cell-specific composite particles exhibiting a selective activity towards antigen-positive target cells. Besides safe and targeted delivery of death ligands such as TNF, TLP should be suitable for various diagnostic and therapeutic applications, which benefit from a targeted delivery of reagents embedded into the particle core or displayed on the core particle surface.