Multi-modal imaging based on multifunctional nanoparticles is a promising alternative approach to improve the sensitivity of early cancer diagnosis. In this study, highly upconverting fluorescence and strong relaxivity rare-earth nanoparticles coated with paramagnetic lanthanide complex shells and polyethylene glycol (PEGylated UCNPs@DTPA-Gd(3+)) are synthesized as dual-modality imaging contrast agents (CAs) for upconverting fluorescent and magnetic resonance dual-modality imaging. PEGylated UCNPs@DTPA-Gd(3+) with sizes in the range of 32-86 nm are colloidally stable. They exhibit higher longitudinal relaxivity and transverse relaxivity in water (r1 and r2 values are 7.4 and 27.8 s(-1) per mM Gd(3+), respectively) than does commercial Gd-DTPA (r1 and r2 values of 3.7 and 4.6 s(-1) per mM Gd(3+), respectively). They are found to be biocompatible. In vitro cancer cell imaging shows good imaging contrast of PEGylated UCNPs@DTPA-Gd(3+). In vivo upconversion fluorescent imaging and T1-weighted MRI show excellent enhancement of both fluorescent and MR signals in the livers of mice administered PEGylated UCNPs@DTPA-Gd(3+). All the experimental results indicate that the synthesized PEGylated UCNPs@DTPA-Gd(3+) present great potential for biomedical upconversion of fluorescent and magnetic resonance dual-modality imaging applications.