Magnetic luminescent hybrid nanoparticles Fe3O4/BaMoO4:Dy3+ (MLHNPs) were successfully synthesized by the co-precipitation method using ethylene glycol. The MLHNPs are functionalized with β-cyclodextrin (CD) using 3-aminopropyl triethoxysilane (APTES). The surface functionalization of nanoparticles and their conjugation have been confirmed via powder XRD, FTIR, HRTEM, and PL analyses. The feasibility of functionalized MLHNPs as nanocarriers for hydrophobic drugs (triazole derivatives) was verified by studying the uptake and release profile using a triazole derivative as a hydrophobic drug. In addition, the photoluminescence spectroscopy results confirmed the optical imaging capability of MLHNPs. The outcomes of loading and release disclose that this system is likely to be a suitable tool as a hydrophobic drug carrier.