Two "aggregation-enhanced emission" (AEE) active cyclometalated phosphorescent iridium(III) complexes, SM2 and SM4, were synthesized to evaluate the influence of lipophilicity on photodynamic therapy efficacy. Compared to SM2, SM4 had a higher logP due to the presence of naphthyl groups. As observed by confocal microscopy, this increased lipophilicity of SM4 significantly enhanced its cellular uptake in breast cancer cells. Both the molecules were found to be noncytotoxic under nonirradiating conditions. However, with light irradiation, SM4 exhibited significant cytotoxicity at a 500 nM dose, whereas SM2 remained noncytotoxic, signifying the influence of lipophilicity on cellular internalization and cytotoxicity. Mechanistically, light-irradiated SM4-treated cancer cells exhibited a significant increase in the intracellular reactive oxygen species (ROS) level. Neutralizing ROS with N-acetylcysteine (NAC) pretreatment partly abolished the cytotoxic ability, indicating ROS as one of the major effectors of cell cytotoxicity. Two nanoparticle (NP) formulations of SM4 were developed to improve the intracellular delivery: a PLGA-based NP and a Soluplus-based micelle. Interestingly, PLGA and Soluplus NP formulations exhibited a 10-and 22-fold increased emission intensity, respectively, compared to SM4. There was also an increase in the excited-state lifetime. Additionally, the Soluplus-based micelles encapsulating SM4 exhibited enhanced cellular uptake and increased cytotoxicity compared to the PLGA NPs encapsulating SM4. Altogether, the current study indicates the importance of rational molecular designing and the significance of a proper delivery vector for improving photodynamic therapy efficacy.