Temperature- and pH-sensitive amphiphilic polymer poly(N-isopropylacrylamide-co-acrylic acid-co-cholesteryl acrylate) (P(NIPAAm-co-AA-co-CHA)) has been synthesized and employed to encapsulate paclitaxel, a highly hydrophobic anticancer drug, in core-shell nanoparticles fabricated by a membrane dialysis method. The nanoparticles are spherical in shape, and their size can be made below 200 nm by varying fabrication parameters. The lower critical solution temperature (LCST) of the nanoparticles is pH-dependent. Under the normal physiological condition (pH 7.4), the LCST is well above the normal body temperature (37ºC) but it is below 37ºC in an acidic environment (e.g. inside the endosome or lysosome). The critical association concentration of the polymer is determined to be 7 mg/L. Paclitaxel can be easily encapsulated into the nanoparticles. Its encapsulation efficiency is affected by fabrication temperature, initial drug loading and polymer concentration. In vitro release of paclitaxel from the nanoparticles is responsive to external pH changes, which is faster in a lower pH environment. Cytotoxicity of paclitaxel-loaded nanoparticles against MDA-MB-435S human breast carcinoma cells is slightly higher than that of free paclitaxel. In addition, doxorubicin is used as a probe to study cellular uptake using a confocal laser scanning microscope (CLSM). Doxorubicin molecules are able to enter the cytoplasm after escaping from the endosome and/or the lysosome. The temperature- and pH-sensitive nanoparticles would make a promising carrier for intracellular delivery of anticancer drugs.