The present study aimed to synthesize AgFeO2 nanocarriers by a thermal treatment method and to test them with respect to their applicability in photodynamic therapy and drug delivery of anti-cancer drugs. Chemical structure, surface morphology, and magnetic properties of AgFeO2 were studied by X-ray diffractometer, Field emission-scanning electron microscopy, Fourier-transform infrared spectroscopy, and vibrating-sample magnetometer. The X-ray data for AgFeO2 indicated the typical patterns of rhombohedral phase with delafossite structure. The biocompatibility of AgFeO2 was evaluated by a hemolysis test and a lethal dose test. The results confirmed the non-toxicity of the nanoparticles when used in photodynamic therapy. The loading and encapsulation efficiency of AgFeO2 were 20.23 ± 0.24 and 84.55 ± 1.24, respectively. Furthermore, when the pH of the release media decreased from 7.4 to 5.8, the release rate of the Quercetin from Quercetin loaded AgFeO2 increased from 52 to 70%. In the photodynamic therapy, the cytotoxicity of Quercetin, AgFeO2 and Quercetin-loaded AgFeO2 on tumor cells was studied. Cytotoxity of tumor cells treated with AgFeO2 and Quercetin loaded AgFeO2 under UV light significantly decreased from 65.7 to 27.2% to 23.58, and 7.6%, respectively. The results suggest that AgFeO2 is a suitable nanocarrier to be used in drug delivery and photodynamic therapy.