Polyethylene glycol (PEG) surface coatings are widely used to render stealth properties to nanoparticles in biological applications. There is abundant literature on the benefits of PEG coatings and their ability to reduce protein adsorption, to diminish nonspecific interactions with cells, and to improve pharmacokinetics, but very little discussion of the limitations of PEG coatings. Here, we show that physiological concentrations of cysteine and cystine can displace methoxy-PEG-thiol molecules from the gold nanoparticle (GNP) surface that leads to protein adsorption and cell uptake in macrophages within 24 h. Furthermore, we address this problem by incorporating an alkyl linker between the PEG and the thiol moieties that provides a hydrophobic shield layer between the gold surface and the hydrophilic outer PEG layer. The mPEG-alkyl-thiol coating greatly reduces protein adsorption on GNPs and their macrophage uptake. This has important implications for the design of GNP for biological systems.