Diclofenac sodium (abrr. DS) and indomethacin (abrr. IMC) have been intercalated into the layered terbium hydroxide (LTbH) by anion exchange method. Chemical compositions, thermostability, morphology, luminescence property, release behaviors and cytotoxic effects have been investigated. The DS molecules may embed between layers with a bilayered arrangement and the IMC may correspond to a monolayered arrangement. The Tb3+ luminescence in DS-LTbH and IMC-LTbH composites were enhanced compared with LTbH precusor and the luminescence intensity increases with the deprotonation degree. Drug release was measured with HPLC, and LTbH showed sustained release behavior on both drugs. Further In Vitro evaluation were carried out on cancer cells. Cytotoxic effect of LTbH was observed with a sulforhodamine B colorimetric assay on a variety of cancer cell lines, which revealed that the LTbH showed little cytotoxic effect. Results indicate LTbH may offer a potential vehicle as an effective drug delivery system along with diagnostic integration.