Localization of rectal tumors is a challenge in minimally invasive surgery due to the lack of tactile sensation. We had developed liposomal indocyanine green (Lip-ICG) for localization of rectal tumor. In this study we evaluated the effects of liposome size and lipid PEGylation on imaging. We used an endoscopically-guided orthotopic experimental rectal cancer model in which tumor fluorescence was determined at different time points after intravenous (i.v.) administration of Lip-ICG and PEGylated liposomes (PEG-Lip-ICG). Signal intensity was measured by tumor-to-background ratio (TBR), or normalized TBR (compared to TBR of free ICG). Fluorescence microscopy of tumor tissue was performed to determine fluorescence localization within the tissue and blood vessels. Liposomes of 60 nm showed an increased TBR compared with free ICG at 12 hours after i.v. injection: normalized TBR (nTBR) = 3.11 vs. 1, respectively (p = 0.006). Larger liposomes (100 nm and 140 nm) had comparable signal to free ICG (nTBR = 0.98 ± 0.02 and 0.78 ± 0.08, respectively), even when additional time points were examined (0.5, 3 and 24 hours). PEG-Lip- ICG were more efficient than Lip-ICG (TBR = 4.2 ± 0.18 vs. 2.5 ± 0.12, p < 0.01) presumably because of reduced uptake by the reticulo-endothelial system. ICG was found outside the capillaries in tumor margins. We conclude that size and lipid modification impact imaging intensity.