Congo red (CR) dye functionalized magnetic nanoparticle was synthesized and characterized by Fourier Transform Infra Red, UV–visible, fluorescence emission spectra, field emission scanning electron microscopy and vibrating sample magnetometry like analytical techniques. The prepared nanohybrid was chemically tagged with poly(ε-caprolactone) (PCL) via ring opening polymerization of ε-caprolactone. The PCL/Fe3O4–CR nanocomposites were characterized by the same techniques and differential scanning calorimetry and thermogravimetric analysis methods. The magnetic moment values of the Fe3O4 after the formation of the nanohybrid and nanocomposite were found to be reduced due to the encapsulation and surface functionalization effects. The magnetic moment value of Fe3O4 was decreased for the nanohybrid and nanohyrbid tagged PCL. The non-isothermal degradation kinetics was characterized in order to find out the energy of activation (Ea) for the thermal degradation of the PCL. For the sake of comparison, the non-isothermal degradation kinetics of the methylorange functionalized Fe3O4 end capped PCL was carried out and the results were critically compared.