Photodynamic therapy (PDT) is a non‐invasive and highly selective therapeutic approach. Photosensitizers (PSs) are an essential ingredient in PDT. However, many PSs are hydrophobic and insoluble, seriously restraining their clinical use. In this study, we prepared biocompatible PSs using water‐soluble organic nanoparticles (WSONs) with a chlorin derivative, pyropheophorbide a (PPa), and polyethylene glycol (PEG) to overcome the limited clinical applications of PDT. Among the PEGylated WSONs (WSON‐PEGs), WSON‐PEG 3400 and 2000 exhibited good water solubility and stability, with no aggregation in aqueous media, a high photoactivity, and low dark toxicity in vitro against A549 and HeLa cells. An in vivo application of WSON‐PEG 3400 using A549 tumour‐bearing BALB/c nude mice demonstrated a three‐fold higher PDT efficacy compared with the control and drug only groups, without treatment‐induced toxicity or toxic side effects. These results demonstrate that WSON‐PEG (3400) is a biocompatible PS with a high PDT efficacy and reduced dark toxicity, suitable for use in clinical trials.