The blood-brain barrier (BBB) limits transport of nanoparticles from the circulation to the brain parenchyma. Angiopep-2, a peptide which functions as a brain transport vector, can be coupled to nanoparticles in order to facilitate binding and internalization by brain endothelial cells (ECs), and subsequent BBB penetration. This multi-step process may be affected by blood flow over brain ECs, as flow influences endothelial cell phenotype as well as interactions of nanoparticles with ECs. In the present study a microfluidic BBB model was constructed to evaluate binding and internalization by brain ECs, as well as BBB penetration of Angiopep-2 coupled liposomes (Ang2-Liposomes) in static and flow conditions. Ang2 conjugation to liposomes markedly improved binding relative to unconjugated liposomes. Ang2-Liposomes bound and were internalized efficiently by brain endothelial cells after static incubation or with 1 dyne/cm2 of fluid shear stress (FSS), while binding was reduced at a FSS of 6 dyne/cm2. Penetration of the model microfluidic BBB by Ang2-Liposomes was higher at a FSS of 1 dyne/cm2 and 6 dyne/cm2 than with static incubation. Analysis of barrier function and control experiments for receptor-mediated penetration provided insight into the magnitude of transcellular versus paracellular transport at each tested FSS. Overall, the results demonstrate that flow impacted the binding and BBB penetration of Ang2-functionalized nanoparticles. This highlights the relevance of the local flow environment for in vitro modeling of the performance of nanoparticles functionalized with BBB penetrating ligands.