Background The design of multifunctional carbon based nanosystems exhibiting light-triggered hyperthermia, emission, low cytotoxicity, and drug delivery capability is of significant interest in the area of nanomaterials. In this study, we present red-emitting and photothermal carbon nanodots (Cdots-βCD/PTC) obtained by the encapsulation of hydrophobic pentacene (PTC) within Carbon nanodots (Cdots) synthesized from beta-cyclodextrin (βCD). Methods The prepared nanostructures were investigated in terms of morphology, size, and optical properties, by absorption and emission optical spectroscopy, atomic force microscopy, dynamics light scattering, Z-potential, nuclear magnetic resonance, and infra-red spectroscopy. Molecular modelling simulation was used to investigate the geometry and the stabilization energy of the Cdots-βCD/PTC inclusion complex. Results The as prepared Cdots-βCD/PTC demonstrated good water dispersibility, green-emission (ϕPL = 1.7%), and photothermal conversion (η = 17.4%) upon red-light excitation (680 nm). Furthermore, Cdots-βCD/PTC low cytotoxicity in the range 0.008 μg–0.8 μg and good interaction with albumin protein (KSV = 2.78 ± 0.28 mL mg−1) were demonstrated. Molecular simulation analysis revealed the formation of the inclusion complex with an energy of −5.32 kcal mol−1, where PTC is orthogonally oriented in the βCD cavity. Conclusions The results presented in this work highlight the potential of Cdots-βCD/PTC as a novel versatile nanosystem for biomedical applications, such as bioimaging and site-specific photothermal treatment of cancer cells.