The isolation and characterisation of single cells from a heterogeneous population are important processes in cell biology, immunology, stem cell research, and cancer research. In the development of novel cell-based therapies, there is a considerable need to target specific cell types to allow for further analysis and amplification ex vivo. We introduce, herein, the use of droplet-based microfluidics as a platform technology for the identification and quantification of distinct cell phenotypes. Using molecular labelling of specific cell populations by antibodies and fluorescent dyes, detection of single cells encapsulated within picolitre-sized aqueous droplets can be performed using high-sensitivity confocal fluorescence detection. Specifically, rare progenitor cells were immunodetected within a heterogeneous population of cells isolated from human periosteal tissue. Using this model human cell population, the accuracy and reproducibility of the droplet system were tested and the results were verified using conventional flow cytometry. It was found that the quantitation of phenotypic subpopulations measured using both techniques is directly comparable. Accordingly, this study demonstrates the biological capacity of droplet-based microfluidics for cellular analysis and provides a necessary first step towards the development of a novel cell sorting technology.