The objective of this research was to produce the smallest possible ZnO nanoparticles through an adapted wet chemical process and subsequently, to fabricate a core–shell structure utilizing polyethylene glycol (PEG) as the shell component. The synthesis, size, and shape of the NPs were confirmed using advanced techniques. The resulting clustered NPs were round and had a size of 9.8 nm. Both plain and core–shell NPs were tested for their antibacterial properties against multi-drug resistant bacteria strains (E. cloacae, E. amnigenus, S. flexneri, S. odorifacae, Citrobacter, and E. coli), with concentrations of 500, 1000, and 1500 μg ml⁻¹ used for testing. Both types of NPs demonstrated antibacterial activity against the tested pathogens, with the core–shell NPs being more effective. The synthesized NPs were biocompatible with human red blood cells, with a low level of hemolysis observed. The biocompatibility of the core–shell NPs was significantly enhanced by the presence of the PEG added as the shell. In addition, their effectiveness as photosensitizers for cancer treatment via photodynamic therapy (PDT) was evaluated. MTT assay was used to evaluate the cytotoxicity of ZnO and PEG-ZnO, and the results showed that these NPs were able to generate ROS inside tumor cells upon irradiation, leading to apoptosis and cell death, making them a promising candidate for PDT.