Nanoparticles composed of therapeutic drugs are suggested as a promising approach for improved drug delivery to tumour cells. Herein, we report the synthesis of 5-fluorouracil (5-FU) encapsulated chitosan (C) functionalized gold (G) nanoparticles (CG5-FU-NPs) and a folate (F) linked counterpart (FCG5-FU-NPs) for enhanced anticancer effects with reduced adverse reactions. Ionic complexation was used to accomplish 5-FU–excipient interaction and the drug encapsulation efficiencies of the nanoparticles were determined appropriately. UV–visible spectroscopy, TEM, FTIR and nanoparticle tracking analysis (NTA) were used to determine the physiochemical properties of the NPs. Also, dynamic dialysis method was used to determine the rate of drug release at simulated tumour and physiological pH conditions. Cell viability was investigated by the MTT assay in human breast adenocarcinoma (MCF-7), hepatocellular carcinoma (HepG2) and kidney (HEK293) cells. CG5-FU-NPs and FCG5-FU-NPs presented as spherical nanoparticles with a size range of 31–33 nm, and showed surface plasmon resonance bands (SPR) between 520 and 525 nm, thus confirming the synthesis of G-NPs. FTIR spectroscopy confirmed the presence of chitosan and folate chitosan on the nanoparticles. CG5-FU-NPs and FCG5-FU-NPs were highly stable as suggested by zeta measurements of approximately + 61.9 mV and + 57.9 mV, respectively. The NPs attained a drug encapsulation efficiency of > 70%, and produced a pH dependent release of 5-FU. Furthermore, both NPs exhibited an enhanced tumour-specific cytotoxicity compared to the free drug, with FCG5-FU-NPs showing significant targeted delivery potential to the folate receptor-positive MCF-7 cells. These results suggest that CG5-FU-NPs and FCG5-FU-NPs are promising therapeutic systems for cancer management.