Although Escherichia coli serotype O157:H7 was identified as a human pathogen in the ninth decade of the twentieth century, it has become recognized as a major foodborne pathogen. In the United States, the severity of E. coli O157:H7 infection in the young and the elderly has had a tremendous impact on human health, the food industry, and federal regulations regarding food safety. In laboratory diagnosis, most microbiologic assays rely on a single phenotype to selectively isolate this pathogen. However, the process is labor- and time-consuming. It is important eventually to develop new assay procedures to detect them. Immunoliposomes, anti-E. coli O157:H7 antibody-tagged liposomes, encapsulating a visible dye, sulforhodamine B, were used in the present study for the development of a field-portable colorimetric immunoassay to detect E. coli O157:H7. The N-succinimidyl-S-acetylthioacetate derivative of the antibodies (anti-E. coli O157: H7) was first conjugated through the reactive N-(kappa-maleimidoundecanoyloxy) sulfosuccinimide ester derivative of dipalmitoylphosphatidylethanolamine and subsequently incorported into liposomes to form the immunoliposomes. A plastic-backed nitrocellulose strip with two immobilized zones is the basis for a sandwich assay to detect E. coli O157:H7. The first zone is the antigen capture zone (AC zone), which is used in a sandwich (noncompetitive) assay format; the other is the biotin capture zone (BC zone), which is used as a positive control for the strip. During the capillary migration of the wicking reagent containing 50 microL of immunoliposomes and 90 microL of the test sample, E. coli O157:H7 with surface-bound immunoliposomes is captured at the AC zone, while the unbound immunoliposomes migrate and bind to the antibiotin antibodies coated on BC zone. The color density of the AC zone were directly proportional to the amount of E. coli O157:H7 in the test sample. The detection limit of the current assay with heat-killed E. coli O157:H7 was approximately 2500 cells. The selectivity of the newly developed biosensor system was investigated, and pathogens, including Salmonella typhimurium and Listeria genus specific, were proven to have no interference with the detection of E. coli O157:H7.