Single-domain intracellular antibodies are antibody variable segments that bind to specific target proteins inside cells. These antigen-binding variable regions can interfere with protein function or perturb protein–protein interactions and can be used as tools for research, especially functional genomics and proteomics and interfering with the protein interactome. This protocol (Intracellular Antibody Capture, IAC3) describes the isolation of functional variable heavy (VH) or variable light (VL) segments from diverse libraries. The protocol comprises four principle steps: validation of a bait antigen; initial screening in yeast of a single domain library; generation of sub-libraries after the initial screen; and finally confirmation of the positive clones interaction with antigen in yeast and mammalian cells. Each library (initial, second and third) screening takes upto 2 weeks and the overall procedure <3 months. This third generation IAC method has many advantages, including isolation of single domain intracellular antibodies with high affinity and specificity by direct in vivo genetic selection.