Development of efficient nanoparticles (NPs) for cancer therapy remains a challenge. NPs are required to have high stability, uniform size, sufficient drug loading, targeting capability, and ability to overcome drug resistance. In this study, the development of a NP formulation that can meet all these challenging requirements for targeted glioblastoma multiform (GBM) therapy is reported. This multifunctional NP is composed of a polyethylene glycol-coated magnetic iron oxide NP conjugated with cyclodextrin and chlorotoxin (CTX) and loaded with fluorescein and paclitaxel (PTX) (IONP-PTX-CTX-FL). The physicochemical properties of the IONP-PTX-CTX-FL are characterized by transmission electron microscope, dynamic light scattering, and high-performance liquid chromatography. The cellular uptake of NPs is studied using flow cytometry and confocal microscopy. Cell viability and apoptosis are assessed with the Alamar Blue viability assay and flow cytometry, respectively. The IONP-PTX-CTX-FL had a uniform size of ≈44 nm and high stability in cell culture medium. Importantly, the presence of CTX on NPs enhanced the uptake of the NPs by GBM cells and improved the efficacy of PTX in killing both GBM and GBM drug-resistant cells. The IONP-PTX-CTX-FL demonstrated its great potential for brain cancer therapy and may also be used to deliver PTX to treat other cancers.