Palladium, a near-infrared plasmonic material has been recognized for its use in photothermal therapy as an alternative to gold nanomaterials. However, its potential application has not been explored well in biomedical applications. In the present study, palladium nanoparticles were synthesized and the surface of the particles was successfully modified with chitosan oligosaccharide (COS), which improved the biocompatibility of the particles. More importantly, the particles were functionalized with RGD peptide, which improves particle accumulation in MDA-MB-231 breast cancer cells and results in enhanced photothermal therapeutic effects under an 808-nm laser. The RGD peptide-linked, COS-coated palladium nanoparticles (Pd@COS-RGD) have good biocompatibility, water dispersity, and colloidal and physiological stability. They destroy the tumor effectively under 808-nm laser illumination at 2 W cm-2 power density. Further, Pd@COS-RGD gives good amplitude of photoacoustic signals, which facilitates the imaging of tumor tissues using a non-invasive photoacoustic tomography system. Finally, the fabricated Pd@COS-RGD acts as an ideal nanotheranostic agent for enhanced imaging and therapy of tumors using a non-invasive near-infrared laser.