Technical Abstract: Solid lipid particles provide a method to encapsulate and control the release of drugs in vivo but lack the imaging capability provided by CdS quantum dots. This shortcoming was addressed by combining these two technologies into a model system that uses iron oxide as a non-toxic imaging component in place of CdS. Iron oxide can form particles of 30-40 nm diameters by self assembly and exhibit a band gap of 2.3 eV. These particles can serve as centers for bioprobes or therapeutic compounds and offer selective binding to target sites. The encapsulation of these structures by thermal inversion of lipids provides a nonpolar coating that can facilitate transport and delivery of the bioactive compounds.