Among various materials designed for anticancer drug transport, sulfide nanoparticles are uniquely intriguing owing to their spectral characteristics. Exploration of newer nanoscale copper sulfide particles with dysprosium doping is reported herein. It leads to a change in the physicochemical properties of the sulfide nanoparticles and hence the difference in drug release and cytotoxicity. We intend to purport the suitably engineered cobalt sulfide and dysprosium-doped cobalt sulfide nanoparticles that are magnetic and NIR-absorbing, as drug delivery vehicles. The drug loading and release are based on the supramolecular drug complex formation on the surface of the nanoparticles. The nanomaterials are synthesized employing hydrothermal procedures, coated with a biocompatible poly-β-cyclodextrin, and characterized using the methods of diffractometry, microscopy, spectroscopy, thermogravimetry and magnetometry. The sustained drug release is investigated in vitro. 5-Fluorouracil is loaded in the nanocarriers. The empty and 5-fluorouracil-loaded nanocarriers are screened for their anti-breast cancer activity in vitro on MCF-7 cells. The size of the nanoparticles is below 10 nm. They show soft ferromagnetic characteristics. Further, they show broad NIR absorption bands extending up to 1200 nm, with the dysprosium-doped material displaying greater absorbance. The drug 5-fluorouracil is encapsulated in the nanocarriers and released sustainably, with the expulsion duration extending over 10 days. The IC50 of the blank and the drug-loaded cobalt sulfide are 16.24 ± 3.6 and 12.2 ± 2.6 μg mL-1, respectively. For the drug-loaded, dysprosium-doped nanocarrier, the IC50 value is 9.7 ± 0.3 μg mL-1. The ultrasmall nanoparticles possess a size suitable for drug delivery and are dispersed well in the aqueous medium. The release of the loaded 5-fluorouracil is slow and sustained. The anticancer activity of the drug-loaded nanocarrier shows an increase in efficacy, and the cytotoxicity is appreciable due to the controlled release. The nanocarriers show multi-functional characteristics, i.e., magnetic and NIR-absorbing, and are promising drug delivery agents.