Pioglitazone is a widely used anti-diabetic drug that induces cytotoxicity in cancer cells; however, its clinical use is questioned due to its associated liver toxicity caused by increased oxidative stress. We therefore employed nitroxide-radical containing nanoparticle, termed redox nanoparticle (RNP(N)) which is an effective scavenger of reactive oxygen species (ROS) as a drug carrier. RNP(N) encapsulation increased pioglitazone solubility, thus increasing cellular uptake of encapsulated pioglitazone which reduced the dose required to induce toxicity in prostate cancer cell lines. Investigation of in vitro molecular mechanism of pioglitazone revealed that both apoptosis and cell cycle arrest were involved in tumor cell death. In addition, intravenously administered pioglitazone-loaded RNP(N) produced significant tumor volume reduction in vivo due to enhanced permeation and retention effect. Most importantly, oxidative damage caused by pioglitazone in the liver was significantly suppressed by pioglitazone-loaded RNP(N) due to the presence of nitroxide radicals. It is interesting to note that oral administration of encapsulated pioglitazone, and co-administration of RNP(N) and pioglitazone, i.e., no encapsulation of pioglitazone in RNP(N) also significantly contributed to suppression of the liver injury. Therefore, use of RNP(N) either as an adjuvant or as a carrier for drugs with severe side effects is a promising chemotherapeutic strategy.