Aggregation-induced emission (AIE) nanoparticles have been shown promise for fluorescence bioimaging and photodynamic therapy due to the good combination of nanoparticles and organic dyes or photosensitizers. Among several kinds of AIE nanoparticles, those that are capsulated with nanographene oxides (NGO) are easy to make, size-tunable, and have proven to be very stable in deionized water. However, the stability in saline solution still needs improvement for further applications in chemical or biomedical fields, and the efficacy of photodynamic therapy using NGO-capsulate AIE photosensitizers has not been evaluated yet. Herein, we modified NGO with polyethylene glycol (PEG) to improve the stability of NGO-capsulated AIE nanoparticles in phosphate buffer saline. Furthermore, by combining this modification methodwith a dual-functional moleculewhich has both typical AIE property and photosensitizing ability, we performed both two-photon fluorescence bioimaging and photodynamic therapy in vitro and in vivo. Our work shows that AIE nanoparticles capsulated with PEGylated nanographene oxide can be a powerful tool for future bioimaging and photodynamic therapy applications.