We report and demonstrate biomedical applications of a new technique--'living' PEGylation--that allows control of the density and composition of heterobifunctional PEG (HS-PEG-R; thiol-terminated poly(ethylene glycol)) on gold nanoparticles (AuNPs). We first establish 'living' PEGylation by incubating HS-PEG₅₀₀₀-COOH with AuNPs (∼20 nm) at increasing molar ratios from zero to 2000. This causes the hydrodynamic layer thickness to differentially increase up to 26 nm. The controlled, gradual increase in PEG-COOH density is revealed after centrifugation, based on the ability to re-suspend the pellet and increase the AuNP absorption. Using a fluorescamine-based assay we quantify differential HS-PEG₅₀₀₀-NH₂ binding to AuNPs, revealing that it is highly efficient until AuNP saturation is reached. Furthermore, the zeta potential incrementally changes from -44.9 to +52.2 mV and becomes constant upon saturation. Using 'living' PEGylation we prepare AuNPs with different ratios of HS-PEG-RGD (RGD: Arg-Gly-Asp) and incubate them with U-87 MG (malignant glioblastoma) and non-target cells, demonstrating that targeting ligand density is critical to maximizing the efficiency of targeting of AuNPs to cancer cells. We also sequentially control the HS-PEG-R density to develop multifunctional nanoparticles, conjugating positively charged HS-PEG-NH₂ at increasing ratios to AuNPs containing negatively charged HS-PEG-COOH to reduce uptake by macrophage cells. This ability to minimize non-specific binding/uptake by healthy cells could further improve targeted nanoparticle efficacy.