Prostate cancer is one of the most widespread cancer types throughout the world, and the second most prevalent in males. The current common method for prostate cancer detection results in high false positive and negative rates, leading to an increasing need for an alternative approach for diagnosis. Upon detection, prostate cancer treatment options with cytotoxic agents are limited, with the exceptions of Docetaxel and Cabazitaxel, which are often used as second-line treatment in more aggressive types of prostate cancer. Other chemotherapies were found to cause adverse side effects, partially due to high dosing that is required for efficacy. Prostate specific membrane antigen (PSMA) is an enzyme that is highly overexpressed in prostate cancer cells and the neovasculature of human prostate tumors, and serves as a promising target for prostate cancer identification and targeting. In order to develop both an accurate diagnostic agent and drug carriers for prostate cancer, we developed four single domain antibodies (nanobodies) from camel, with extremely high in vitro affinities towards PSMA, starting from KD of 50 pM. These nanobodies present good and specific binding to PSMA-expressing cell lines, but do not inhibit the enzymatic activity of PSMA. Most importantly, our proteins show accumulation in prostate cancer tumors expressing PSMA but not in tumors lacking it in in vivo optical imaging assays. All four variants internalize into PSMA expressing cells. This ability allows the nanobodies to serve as carriers for targeted drug delivery to reduce the necessary dosing amount. The nanobody with the highest in vitro affinity, as well as longest clearance time from tumors, was conjugated to a pH-sensitive linker and doxorubicin. This nanobody-drug conjugate internalize specifically into PSMA expressing cells, where the doxorubicin was separated from the protein. Cytotoxic activity was observed in vitro in PSMA expressing cells. In vivo, similar tumor growth inhibition was observed in animals treated with doxorubicin alone and animals treated with 20-fold less doxorubicin, conjugated to the nanobody. Our data suggests that conjugating a nanobody with high affinity to a cytotoxic drug enables the use of much lower doses, while maintaining similar efficacy. This could allow the use of drugs that were previously shown to cause adverse side effect and expand the possibilities to treat different types of cancer.