We present a theory for two-particle entanglement generation and detection in mesoscopic conductors at finite temperature. The entanglement is expressed in terms of the orbital density matrix reduced from the full many body state emitted by the source. It is shown that the entanglement decreases with increasing temperature, reaching zero at a system dependent critical temperature. This is a consequence of the enhanced fluctuations in the stream of emitted particles. A Bell inequality and a scheme for quantum state tomography formulated in terms of current and zero frequency noise is presented. The relation to the entanglement projected out of the full many body state is discussed. We apply the theory to the recent experiment by Neder et al, Nature '07 on a fermionic two-particle interferometer and show that a detection of electronic entanglement in mesoscopic conductors is within experimental reach.