Chitosan functionalized luminescent rare earth doped cerium, terbium nanoparticles (LaF3:Ce3+, Tb3+/chi NPs) as a drug carrier for 4-[(1-(2-carbamothioylhydrazinylidene)ethyl]phenyl acetate (acesemi) was designed using a simple co-precipitation method. The synthesized chitosan functionalized nanoparticles were observed to be spherical in shape with an average diameter of 10-12 nm. They are water soluble and biocompatible, in which the hydroxyl and amino functional groups on its surface are utilized for the bio conjugation of the synthesized anticancer drug, the ace semi. The nature of ace semi binding with LaF3:Ce3+,Tb3+/chi NPs were examined using X-ray diffraction and transmission electron microscopy. Alternate interactions owing to complex formation between ace semi and LaF3:Ce3+,Tb3+/chi NPs were carried out by UV-Visible, steady and excited state fluorescence spectroscopy. The photo-physical characterization conclude that the adsorption and release of ace semi from LaF3:Ce3+,Tb3+/chi NPs is quicker and also confirms that this may be due to the hydrogen bonding between the nitrogen and amino group of drug and nanoparticles. The maximum percentage yield and entrapment efficiency of 87.01 ±0.91 and 84.34 ±0.26 were achieved at a stoichiometric ratio of 1:4 of ace semi and LaF3:Ce3+,Tb3+/chi NPs respectively. In addition, antitumoral activity study reveals that ace semi conjugated LaF3:Ce3+,Tb3+/chi NPs show increased cytotoxic effect on A549 lung cancer cell lines than that of free ace semi. Copyright © 2017 American Scientific Publishers All rights reserved.