Novel dye-linked zinc oxide nanoparticles (NPs) hold potential as photosensitizers for biomedical applications due to their excellent thermal- and photo-stability. The particles produced reactive oxygen species (ROS) upon irradiation with 850 nm near infrared (NIR) light in a concentration- and time-dependent manner. Upon irradiation, ROS detected in vitro in human umbilical vein endothelial cells (HUVEC) and human carcinoma MCF7 cells positively correlated with particle concentration and interestingly, ROS detected in MCF7 was higher than in HUVEC. Preferential cytotoxicity was also exhibited by the NPs as cell killing was higher in MCF7 than in HUVEC. In the absence of irradiation, dye-linked ZnO particles minimally affected the viability of cell (HUVEC) at low concentrations (<30 μg/mL), but viability significantly decreased at higher particle concentrations, suggesting a need for particle surface modification with poly (ethylene glycol) (PEG) for improved biocompatibility. The presence of PEG on particles after dialysis was indicated by an increase in size, an increase in zeta potential towards neutral, and spectroscopy results. Cell viability was improved in the absence of irradiation when cells were exposed to PEG-coated, dye-linked ZnO particles compared to non-surface modified particles. The present study shows that there is potential for biological application of dye-linked ZnO particles in photodynamic therapy.