The present study describes the preparation, characterization, and applications of newly developed polymeric poly-ɛ-caprolactone (PCL)/pluronic F108 nanoparticles, loaded with anticancer drug, and near infrared (NIR) dye for assessing the localization in the breast cancer model system. Docetaxel and NIR dye, “1,1′-dioctadecyl- 3,3,3′,3′- tetramethylindotricarbocyanine iodide (DiR)” loaded, poly-ɛ-caprolactone (PCL)/pluronic F108–based nanoparticles were formulated by nanoprecipitation method. This formulation was then characterized using various physicochemical methods including size distribution, zeta potential, surface morphology, drug entrapment efficiency, loading capacity, differential scanning calorimetry, in vitro release, and kinetics are performed. In vitro cell proliferative studies of human breast cancer BT-474 cells were carried out to evaluate the anticancer efficacy of the nanoparticles. The role of pluronic F108 was also evaluated in cell uptake of the nanoparticles. Drug- and NIR dye–loaded nanoparticles localization at tumor site were studied using noninvasive infrared dye imaging. The optimized nanoparticle formulation had a particle size of 100–300 nm, poly dispersity index of 0.156 and zeta potential of − 7.37 mV ± 4.93 mV. Drug release from the nanoparticle system followed Higuchi kinetics, suggesting diffusion mediated drug release. DSC studies suggest that the drug is either in amorphous or disordered crystalline state in the nanoparticle formulation. The increased accumulation of the PCL/ F108 nanoparticles in vivo suggests its potential as a superior targeted drug delivery system.