The objective of this study was to evaluate the potential of chitosan-gellan nanocapsules (CGNCs) for encapsulation and sustained release of Tamoxifen citrate (TMC) for breast cancer therapy. Polyelectrolyte complex coacervation method was used for production of CGNCs. Interaction studies were conducted by Fourier-transform infra-red (FT-IR), differential scanning colorimetric (DSC), and X-ray diffraction (XRD) to investigate any interaction between drug and excipients. Physicochemical parameters, in vitro drug release and release kinetic were studied. In vitro cell viability study using Michigan Cancer Foundation-7 (MCF-7) breast cancer cells was also investigated. CGNCs had a smooth surface and nanosize range with a positive surface charge and exhibited sustained drug release. Further, TMC loaded CGNCs were found to be more cytotoxic than the free drug in MCF-7. Thus CGNCs may be suitable for breast cancer treatment due to delivering the drug at the site of action for a prolonged period of time.