Photodynamic therapy has been efficiently applied for cancer therapy. Here, we have fabricated the folic acid (FA)- and pheophorbide A (PA)-conjugated FA/PA@Fe3O4 nanoparticle (smart hybrid nanocomposite, SHN) to enhance the photodynamic inactivation (PDI) of specific cancer cells. SHN coated with the PDI agent is designed to have selectivity for the folate receptor (FR) expressed on cancer cells. Structural characteristics and morphology of the fabricated MNPs were studied with X-ray diffraction and scanning electron microscopy. The photophysical properties of SHN were investigated with absorption, emission spectroscopies, and Fourier transform infrared spectroscopy. In addition, the magnetic property of Fe3O4 nanoparticle (MNP) can be utilized for the collection of SHNs by an external magnetic field. The photofunctionality was given by the photosensitizer, PA, which generates reactive oxygen species by irradiation of visible light. Generation of singlet oxygen was directly evaluated with time-resolved phosphorescence spectroscopy. Biocompatibility and cellular interaction of SHN were also analyzed by using various cancer cells, such as KB, HeLa, and MCF-7 cells which express different levels of FR on the surface. Cellular adsorption and the PDI effect of SHN on the various cancer cells in vitro were correlated well with the surface expression levels of FR, suggesting potential applicability of SHN on specific targeting and PDI of FR-positive cancers.