Label free sorting of circulating tumor cells (CTCs) often remains a challenge due to their rarity in peripheral blood and identical morphology to white blood cells. We present a novel label-free passive microfluidic technique for isolation of cancer cells from peripheral blood mononuclear cells (PBMCs) in aqueous two-phase system (ATPS). Our technique involves non-inertial lift induced lateral cell migration across liquid–liquid interface that is employed for sorting cells of different size and stiffness. The interplay between lift force and interfacial tension (IFT) force governs cell migration phenomena. We estimate the order of magnitude of the lift force and find it to be higher than the IFT for cancer cells above a critical strain rate parameter. The effect of spreading parameter and viscoelastic force was found to have negligible effect on lateral migration of cells. We demonstrated isolation of two different types of cancer cells, namely, MCF-7 and MDA-MB-231 from PBMCs and quantify our sorting results by tagging the cells with EpCAM and CD45 and using fluorescence imaging. With 102–104 cancer cells in 105–107 PBMCs, we achieved a processing rate of >25 000 cells per min at a sorting efficiency of ∼99%. Moreover, we demonstrated that cancer cells isolated from PBMCs using the proposed technique remain viable and can be cultured for downstream analysis.