Amyloids, with their β-sheet-rich structure, contribute to diabetes, neurodegenerative diseases, and amyloidosis by aggregating within diverse anatomical compartments. Insulin amyloid (IA), sharing structural resemblances with amyloids linked to neurological disorders, acts as a prototype, while compounds capable of degrading these fibrils hold promise as therapeutic agents for amyloidosis intervention. In this research, liposomal nanoformulated iota carrageenan (nCG) was formulated to disrupt insulin amyloids, demonstrating about a 17–20 % higher degradation efficacy compared to conventional carrageenan through thioflavin T fluorescence, dynamic light scattering analysis, and turbidity quantification. The biocompatibility of the nCG and nCG-treated insulin amyloids was evaluated through MTT assay, live-dead cell assay on V79 cells, and hemolysis testing on human blood samples to establish their safety for use in vitro. Zebrafish embryos were utilized to assess in vivo biocompatibility, while adult zebrafish were employed to monitor the degradation capacity of IA post subcutaneous injection, with fluorescence emitted by the fish captured via IVIS. This demonstrated that the formulated nCG exhibited superior anti-amyloid efficacy compared to carrageenan alone, while both materials demonstrated biocompatibility. Furthermore, through docking simulations, an exploration was conducted into the molecular mechanisms governing the inhibition of the target protein pancreatic insulin by carrageenan.