Late-stage diagnosis of lung cancer occurs ~95% of the time due to late manifestation of its symptoms, necessitating rigorous treatment following diagnosis. Existing treatment methods are limited by lack of specificity, systemic toxicity, temporary remission, and radio-resistance in lung cancer cells. In this research, we have developed a folate receptor-targeting multifunctional dual drug-loaded nanoparticle (MDNP) containing a poly(N-isopropylacrylamide)-carboxymethyl chitosan shell and poly lactic-co-glycolic acid (PLGA) core for enhancing localized chemo-radiotherapy to effectively treat lung cancers. The formulation provided controlled releases of the encapsulated therapeutic compounds, NU7441 - a potent radiosensitizer, and gemcitabine - an FDA approved chemotherapeutic drug for lung cancer chemo-radiotherapy. The MDNPs showed biphasic NU7441 release and pH-dependent release of gemcitabine. These nanoparticles also demonstrated good stability, excellent hemocompatibility, outstanding in vitro cytocompatibility with alveolar Type I cells, and dose-dependent caveolae-mediated in vitro uptake by lung cancer cells. In addition, they could be encapsulated with superparamagnetic iron oxide (SPIO) nanoparticles and visualized by MRI in vivo. Preliminary in vivo results demonstrated the low toxicity of these particles and their use in chemo-radiotherapy to effectively reduce lung tumors. These results indicate that MDNPs can potentially be used as nano-vehicles to provide simultaneous chemotherapy and radiation sensitization for lung cancer treatment.