Drug resistance is a major obstacle to the success of cancer chemotherapy. Overexpression of the drug-efflux transporter P-glycoprotein (P-gp) is a key factor contributing to tumor drug resistance. Third generation P-gp inhibitors like tariquidar have shown promising efficacy in early clinical trials. However, for maximum efficacy, it is important to limit the exposure of normal cells and tissues to the efflux inhibitor and the anticancer drug, and temporally colocalize the drug-inhibitor combination in the tumor cells. In this study, we investigated simultaneous and targeted delivery of anticancer drug, paclitaxel, with P-gp modulator, tariquidar, using poly(d,l-lactide-co-glycolide) nanoparticles to overcome tumor drug resistance. Nanoparticles were surface functionalized with biotin for active tumor targeting. Dual agent nanoparticles encapsulating the combination of paclitaxel and tariquidar showed significantly higher cytotoxicity in vitro than nanoparticles loaded with paclitaxel alone. Enhanced therapeutic efficacy of dual agent nanoparticles could be correlated with increased accumulation of paclitaxel in drug-resistant tumor cells. In vivo studies in a mouse model of drug-resistant tumor demonstrated significantly greater inhibition of tumor growth following treatment with biotin-functionalized nanoparticles encapsulating both paclitaxel and tariquidar at a paclitaxel dose that was ineffective in the absence of tariquidar. Taken together, these results suggest that the use of targeted, dual agent nanoparticles delivering a combination of P-gp modulator and anticancer drug is a very promising approach to overcome tumor drug resistance.