Nanoparticles, with their distinct properties that vary from their bulk material equivalent, continue to gain popularity for studies into multi-modal applications in medicine. This research introduces the use of thulium oxide nanoparticles for biological applications and characterizes the potential of this novel nanoparticle for image-guided radiotherapy of brain cancer. In this study, we investigate the structural characteristics of this nanoparticle, and reveal a significant dose enhancement towards radioresistant brain tumour cells in vitro that also underlies an improvement in the CT image contrast of brain tumours in vivo. The thulium oxide nanoparticles utilized in the investigations described in this article were measured to be 40–45 nm from x-ray diffraction and scanning electron microscopy data. In vitro investigations assessed the cell survival and DNA damage in 9 l gliosarcoma cells following irradiation with 150 kVp orthovoltage x-rays. Immediately after the 150 kVp irradiation (15 min) an increase in the number of γ-H2AX induced foci indicates the production of more double-strand DNA breaks. Following from the short time-frame irradiation outcomes, clonogenic cell survival assays confirmed long-term radio-sensitization, with the cell sensitivity increasing by a factor of 1.32 (measured at the 10% survival fraction) for the irradiated 9 l cells exposed to thulium nanoparticles. A simple CT experiment shows that our thulium nanoparticles suspended in water at concentrations >0.5 mg ml−1 (0.05–20 mg ml−1 investigated) are clearly observable against water. Extending the CT experiment to an in vivo investigation, cellular uptake of the nanoparticles was demonstrated through CT image enhancement of the cancer site in 9- to 10-week-old Fisher rats bearing 9 l gliosarcomas, 12 days after cell implantation. The 9 l cancer is clearly visible on the CT image after injecting 40 μg of nanoparticles (2 μl at 20 mg ml−1) directly to the cancer site (5.5 mm from the dura and 3.5 mm right laterally of the bregma, 5 mm depth). To our knowledge, this work demonstrates the first application of thulium nanoparticles in biology and medicine, for radiotherapy and image guidance purposes.