Despite some clinical success with antibody-drug conjugates (ADCs) in patients with solid tumors and hematological malignancies, improvements in ADC design are still desirable due to the narrow therapeutic window of these compounds. Tumor-targeting antibody fragments have distinct advantages over monoclonal antibodies, including more rapid tumor accumulation and enhanced penetration, but are subject to rapid clearance. Half-life extension technologies such as PEGylation and albumin-binding domains (ABDs) have been widely used to improve the pharmacokinetics of many different types of biologics. PEGylation improves pharmacokinetics by increasing hydrodynamic size to reduce renal clearance, whereas ABDs extend half-life via FcRn-mediated recycling. In this study, we used an anti-oncofetal antigen 5T4 diabody conjugated with a highly potent cytotoxic pyrrolobenzodiazepine (PBD) warhead to assess and compare the effects of PEGylation and albumin binding on the in vivo efficacy of antibody fragment drug conjugates. Conjugation of 2× PEG20K to a diabody improved half-life from 40 min to 33 h, and an ABD-diabody fusion protein exhibited a half-life of 45 h in mice. In a xenograft model of breast cancer MDA-MB-436, the ABD-diabody-PBD showed greater tumor growth suppression and better tolerability than either PEG-diabody-PBD or diabody-PBD. These results suggest that the mechanism of half-life extension is an important consideration for designing cytotoxic antitumor agents.