AbstractTwo principal methods for cancer drug testing are widely used, namely, in vitro 2D cell monolayers and in vivo animal models. In vitro 2D culture systems are simple and convenient but are unable to capture the complexity of biological processes. Animal models are costly, time‐consuming, and often fail to replicate human activity. Here a microfluidic tumor‐on‐a‐chip (TOC) model designed for assessing multifunctional liposome cancer targeting and efficacy is presented. The TOC device contains three sets of hemispheric wells with different sizes for tumor spheroid formation and evaluation of liposomes under a controlled flow condition. There is good agreement between time‐elapsed tumor targeting of fluorescent liposomes in the TOC model and in in vivo mouse models. Evaluation of the anticancer efficacy of four PTX‐loaded liposome formulations shows that compared to 2D cell monolayers and 3D tumor spheroid models, the TOC model better predicts the in vivo anticancer efficacy of targeted liposomes. Lastly, the TOC model is used to assess the effects of flow rates and tumor size on treatment outcome. This study demonstrates that the TOC model provides a convenient and powerful platform for rapid and reliable cancer drug evaluation.