Chitosan functionalized luminescent rare earth doped terbium nanoparticles (LaF3:Tb3+/chi NPs) as a drug carrier for methotrexate (MTX) was designed using a simple chemical precipitation method. The synthesized chitosan functionalized nanoparticles were found to be spherical in shape with an average diameter of 10-12nm. They are water soluble and biocompatible, in which the hydroxyl and amino functional groups on its surface are utilized for the bioconjugation of the anticancer drug, the methotrexate. The nature of MTX binding with LaF3:Tb3+/chi nanoparticles were examined using X-ray diffraction, zeta potential analyzer and transmission electron microscopy. The other interactions due to complex formation between MTX and LaF3:Tb3+/chi NPs were carried out by UV-Visible, steady and excited state fluorescence spectroscopy. The photo-physical characterization revealed that the adsorption and release of MTX from LaF3:Tb3+/chi NPs is faster than gold nanoparticles and also confirms that this may be due to weak interaction i.e. the Vander Waals force of attraction between the carboxyl and amino group of drug and nanoparticles. The maximum percentage yield and entrapment efficiency of 85.91±0.71 and 83.82± 0.14 were achieved at a stochiometric ratio of 4:5 of MTX and LaF3:Tb3+/chi nanoparticles respectively. In addition, antitumoral activity study reveals that MTX conjugated LaF3:Tb3+/chi nanoparticles show higher cytotoxic effect on MCF-7 breast cancer cell lines than that of free MTX. © 2014 Elsevier Masson SAS.