In biomedical research there is an ongoing demand for new technologies, which help to elucidate disease mechanisms and provide the basis to develop novel therapeutics. In this context a comprehensive understanding of cellular processes and their pathophysiology based on reliable information on abundance, localization, posttranslational modifications and dynamic interactions of cellular components is indispensable. Besides their significant impact as therapeutic molecules, antibodies are arguably the most powerful research tools to study endogenous proteins and other cellular components. However, for cellular diagnostics their use is restricted to endpoint assays using fixed and permeabilized cells. Alternatively, live cell imaging using fluorescent protein-tagged reporters is widely used to study protein localization and dynamics in living cells. However, only artificially introduced chimeric proteins are visualized, whereas the endogenous proteins, their posttranslational modifications as well as non-protein components of the cell remain invisible and cannot be analyzed. To overcome these limitations, traceable intracellular binding molecules provide new opportunities to perform cellular diagnostics in real time. In this review we summarize recent progress in the generation of intracellular and cell penetrating antibodies and their application to target and trace cellular components in living cells. We highlight recent advances in the structural formulation of recombinant antibody formats, reliable screening protocols and sophisticated cellular targeting technologies and propose that such intrabodies will become versatile research tools for real time cell-based diagnostics including target validation and live cell imaging. This article is part of a Special Issue entitled: Recent advances in molecular engineering of antibody.