The role of nanoparticles in cancer medicine is vast with debate still surrounding the distinction between therapeutic efficacy of actively targeted nanoparticles versus passively targeted systems for drug delivery. While it is commonly accepted that methodologies that result in homing a high concentration of drug loaded nanoparticles to the tumor is beneficial, the role of intracellular trafficking of these nanoparticles in dictating the overall therapeutic outcome remains unresolved. Herein we demonstrate that the therapeutic outcome of drug loaded nanoparticles is governed beyond simply enabling nanoparticle internalization in cells. Using two model polymeric nanoparticles, one decorated with the GE11 peptide for active targeting of the epidermal growth factor receptor (EGFR) and the other without, we demonstrate that EGFR mediated intracellular internalization results in an enhanced therapeutic effect compared to the nontargeted formulation. Our findings demonstrate that the intracellular destination of nanoparticles beyond its ability to internalize is an important parameter that has to be accounted for in the design of targeted drug delivery systems.