In this paper fluorescent magnetic Fe3O4@m-SiO2@YPO4:Tb3+ particles with a size of 52 nm have been prepared and characterized. The surface of the nanoparticles was modified with β-cyclodextrin and folic acid using glutathione as a linker. The hydrophobic anticancer drug 5-fluorouracil (5-FU) was successfully loaded on the fluorescent magnetic nanoparticles via formation of the 5-FU–CD inclusion complex. The overall size of the drug conjugate is 71 nm and the particles are highly stable in an aqueous medium without any deterioration of HD size. The drug conjugate favors more release at lower pH owing to instability of the 5-FU–CD inclusion complex. These results demonstrate that the developed multifunctional nanocomposite can be potentially used in magnetically guided delivery of 5-FU.