Mesoporous bioactive glass demonstrated valuable biomedical applications especially in the field of bone regeneration and drug delivery. For the treatment of cancer by chemotherapy, controlled drug delivery system is one of the significant methods. In this work, silver oxide doped mesoporous bioactive glass nanoparticles (Ag2O-MBG NPs) were developed for the controlled release of doxorubicin as a model drug. Ag2O-MBG NPs were prepared by using the sol-gel method and employing pluronic 123 as an internal template. The prepared Ag2O-MBG NPs were characterized by energy-dispersive X-ray spectroscopy (EDX), scanning electron microscopy (SEM) and transmission electron microscopy (TEM) for composition, shape, morphology, and size. Surface area and pore size were determined by the Brunauer-Emmett-Teller (BET) and Barrett-Joyner-Halenda (BJH) method respectively. When immersed in simulated body fluid (SBF), hydroxycarbonate apatite (HCAp) formation was demonstrated as established by Fourier Transform Infrared (FTIR) spectroscopy and X-ray diffraction (XRD). The as-synthesized Ag2O-MBG NPs did not show any detrimental effects during MTT assay and in vivo tissue histopathology. Doxorubicin (DOX) was encapsulated with an efficiency of 84% and its release was observed to be affected by the drug loading concentration (0.2–1.0 mg/mL) and pH (6.4–8.4) of the release media. DOX release was of 93% was witnessed approximately for two weeks at a slight acidic pH of 6.4. At 11.88 μg/mL of DOX-Ag2O-MBG NPs, notable inhibitory effects on the viability of the MG-63 osteosarcoma cancer cells were observed. These features proved that the Ag2O-MBG NPs system is effective for bone tissue regeneration and bone cancer treatment.