Molecular beacons which convert specific chemical reactions or binding events into measurable signals are essential tools for understanding cellular and sub-cellular activities at molecular level. In this context, we successfully designed and synthesized a peptide-based drug conjugated nano-beacon that could serve as a cancer detection tool as well as a carrier for targeted drug delivery in cancer treatment. An important characteristic of nano-beacons is that they can self-assemble into nanostructure under physiological condition, which enhances the cancer-cell permeability and retention (EPR effect). Here we designed and synthesized a novel nano-beacons structure conjugated with anti-cancer drug and an enzymatically degradable linker. This linker is susceptible to the cleavage of cathepsin-B, a lysosomal enzyme that is over-expressed in many cancerous cell lines, hence allowing the release of drug at cancer site. Our results showed that these cleavable drug-conjugated nano-beacons are uptake by cancerous MCF-7 cells at the lysosome before diffusing into the cell nuclei. The delivery of anti-cancer drug to MCF-7 results in cell apoptosis as well as the decrease in viability after incubation with the drug-conjugated nano-beacon.