We reported the synthesis and characterization of dual-responsive poly(N-isopropylacrylamide-acrylamide-chitosan) (PAC)-coated magnetic nanoparticles (MNPs) for controlled and targeted drug delivery and imaging applications. The PAC-MNPs size was about 150 nm with 70% iron mass content and excellent superparamagnetic properties. PAC-MNPs loaded with anti-cancer drug doxorubicin showed dual-responsive drug release characteristics with the maximum release of drugs at 40 °C (˜78%) than at 37 °C (˜33%) and at pH of 6 (˜55%) than at pH of 7.4 (˜28%) after 21 days. Further, the conjugation of prostate cancer-specific R11 peptides increased the uptake of PAC-MNPs by prostate cancer PC3 cells. The dose-dependent cellular uptake of the nanoparticles was also significantly increased with the presence of 1.3 T magnetic field. The nanoparticles demonstrated cytocompatibility up to concentrations of 500 μg/ml when incubated over a period of 24 h with human dermal fibroblasts and normal prostate epithelial cells. Finally, pharmacokinetic studies indicated that doxorubicin-loaded PAC-MNPs caused significant prostate cancer cell death at 40 °C than at 37 °C, thereby confirming the temperature-dependent drug release kinetics and in vitro therapeutic efficacy. Future evaluation of in vivo therapeutic efficacy of targeted image-guided cancer therapy using R11-PAC-MNPs will reinforce a significant impact of the multifunctional PAC-MNPs on the future drug delivery systems.