Biodegradable cross-linked N-(2-hydroxypropyl) methacrylamide (HPMA) copolymer micelles can improve the accumulation of drug cargo in tumors by prolonging their circulation time. However, drug delivery can still be ineffective because of intracellular degradation in lysosomes and poor delivery to the nucleus. In this work, we prepared a novel micelle by grafting the hydrophobic HA2 membrane fusion peptide onto hydrophilic HPMA copolymers via a linker that would be cleaved in lysosomes, allowing the HA2 peptide to be released and disrupt lysosome membranes. In addition, we conjugated the drug cargo (H1 peptide) to nucleus-targeting all-trans retinoic acid, and then encapsulated the conjugates into micelles. The drug-loaded micelles efficiently escaped lysosomes and targeted the nucleus in MCF-7 breast cancer cells in culture. They also strongly inhibited tumor growth in mice bearing MCF-7 tumor xenografts, without causing appreciable systemic toxicity. Removing the retinoic acid or preventing the cleavage of HA2 resulted in extremely inefficient lysosomal escape and nuclear delivery, translating into low anti-cancer efficacy in vitro and in vivo. These results suggest that micelle modifications to evade lysosomes and target the nucleus can improve the efficacy of anti-cancer drugs. Our results further suggest that the ability to escape lysosomes improves the nuclear distribution of drug cargos more than the addition of the nuclear-targeting retinoic acid.