Background: Nanoparticle imaging and tracking the release of the loaded material from the nanoparticle system have attracted significant attention in recent years. If the release of the loaded molecules could be monitored reliably in vivo, it would speed up the development of drug delivery systems remarkably. Methods: Here, we test a system that uses indocyanine green (ICG) as a fluorescent agent for studying release kinetics in vitro and in vivo from the lipid iron nanoparticle delivery system. The ICG spectral properties like its concentration dependence, sensitivity and the fluctuation of the absorption and emission wavelengths can be utilized for gathering information about the change of the ICG surrounding. Results: We have found that the absorption, fluorescence, and photoacoustic spectra of ICG in lipid iron nanoparticles differ from the spectra of ICG in pure water and plasma. We followed the ICG containing liposomal nanoparticle uptake into squamous carcinoma cells (SCC) by fluorescence microscopy and the in vivo uptake into SCC tumors in an orthotopic xenograft nude mouse model under a surgical microscope. Conclusion: Absorption and emission properties of ICG in the different solvent environment, like in plasma and human serum albumin, differ from those in aqueous solution. Photoacoustic spectral imaging confirmed a peak shift towards longer wavelengths and an intensity increase of ICG when bound to the lipids. The SCC cells showed that the ICG containing liposomes bind to the cell surface but are not internalized in the SCC-9 cells after 60 minutes of incubation. We also showed here that ICG containing liposomal nanoparticles can be traced under a surgical camera in vivo in orthotopic SCC xenografts in mice.