The objective of this study was to develop optical imaging agent loaded biodegradable nanoparticles with indocynanine green (ICG) using chitosan modified poly(L-lactide-co-epsilon-caprolactone) (PLCL):poloxamer (Pluronic F68) blended polymer. Nanoparticles were formulated with an emulsification solvent diffusion technique using PLCL and poloxamer as blend-polymers. Polyvinyl alcohol (PVA) and chitosan were used as stabilizers. The particle size, shape and zeta potential of the formulated nanoparticles and the release kinetics of ICG from these nanoparticles were determined. Further, biodistribution of these nanoparticles was studied in mice at various time points until 24 h following intravenous administration, using a non-invasive imaging system. The average particle size of the nanoparticles was found to be 146 ± 3.7 to 260 ± 4.5 nm. The zeta potential progressively increased from - 41.6 to + 25.3 mV with increasing amounts of chitosan. Particle size and shape of the nanoparticles were studied using transmission electron microscopy (TEM) which revealed the particles to be smooth and spherical in shape. These nanoparticles were efficiently delivered to the cytoplasm of the cells, as observed in prostate and breast cancer cells using confocal laser scanning microscopy. In vitro release studies indicated sustained release of ICG from the nanoparticles over a period of seven days. Nanoparticle distribution results in mice showing improved uptake and accumulation with chitosan modified nanoparticles in various organs and slower clearance at different time points over a 24 h period as compared to unmodified nanoparticles. The successful formulation of such cationically modified nanoparticles for encapsulating optical agents may lead to a potential deep tissue imaging technique for tumor detection, diagnosis and therapy.