Cellular entry of imaging probes, such as contrast agents for magnetic resonance imaging (MRI), is a key requirement for many molecular imaging studies, particularly imaging intracellular events and cell tracking. Here, we describe the successful development and in vitro analysis of MAGfect, a novel liposome formulation containing a lipidic gadolinium contrast agent for MRI, Gd-DOTA-Chol 1, designed to enter and label cells. Liposome formulation and cell incubation time were optimised for maximum cellular uptake of the imaging probe in a variety of cell lines. MRI analysis of cells incubated with MAGfect showed them to be highly MRI active. This formulation was examined further for cytotoxicity, cell viability and mechanism of cell labelling. One of the key advantages of using MAGfect as a labelling vehicle arises from its potential for additional functions, such as concomitant drug or gene delivery and fluorescent labelling. The gadolinium liposome was found to be an effective vehicle for transport of plasmid DNA (pDNA) into cells and expression levels were comparable to the commercial transfection agent Trojene™.