Layered gadolinium hydroxides (LGdH) have significant potential in simultaneous drug delivery and magnetic resonance imaging (MRI). In this work, we synthesized LGdH nanocomposites surface functionalised with SiO₂ nanodots (LGdH@SiO₂). We find these to have good dispersibility in cell culture medium, and a reduced tendency to aggregate compared to their uncoated analogue. Under the optimal reaction conditions, SiO₂ nanodots were evenly spread across the surface of the LGdH particles. We further intercalated ibuprofen (Ibu) and 5-fluorouracil (5FU) into LGdH@SiO₂, and explored the use of the resultant composites for drug delivery in vitro. While the SiO₂ coating could effectively reduce aggregation of the Ibu intercalate prepared by ion exchange from the parent LGdH, it was noted to increase aggregation in the case of the 5FU-loaded systems produced by coprecipitation. With a SiO₂ coating, 5FU release from the composite was almost zero-order at pH 7.4. The LGdH-5FU@SiO₂ composites can effectively inhibit the growth of A549 cells (a human adenocarcinoma cell line). In contrast, the Ibu-loaded materials are highly biocompatible. After SiO₂ modification, LGdH-5FU@SiO₂ retains the same proton relaxivity properties as LGdH-5FU, while LGdH-Ibu@SiO₂ ecomes suitable for use as a negative contrast agent in MRI. Overall, we find the LGdH@SiO₂ nanocomposites are promising materials for theranostic applications