The presence and quantity of rare cells in the bloodstream of cancer patients provide a potentially accessible source for the early detection of invasive cancer and for monitoring the treatment of advanced diseases. The separation of rare cells from peripheral blood, as a “virtual and real-time liquid biopsy”, is expected to replace conventional tissue biopsies of metastatic tumors for therapy guidance. However, technical obstacles, similar to looking for a needle in a haystack, have hindered the broad clinical utility of this method. In this study, we developed a multistage microfluidic device for continuous label-free separation and enrichment of rare cells from blood samples based on cell size and deformability. We successfully separated tumor cells (MCF-7 and HeLa cells) and leukemic (K562) cells spiked in diluted whole blood using a unique complementary combination of inertial microfluidics and steric hindrance in a microfluidic system. The processing parameters of the inertial focusing and steric hindrance regions were optimized to achieve high-throughput and high-efficiency separation, significant advantages compared with existing rare cell isolation technologies. The results from experiments with rare cells spiked in 1% hematocrit blood indicated >90% cell recovery at a throughput of 2.24 × 10⁷ cells min⁻¹. The enrichment of rare cells was >2.02 × 10⁵-fold. Thus, this microfluidic system driven by purely hydrodynamic forces has practical potential to be applied either alone or as a sample preparation platform for fundamental studies and clinical applications.