Black phosphorus (BP) nanostructures such as nanosheets and nanoparticles have attracted considerable attention in recent years due to their unique properties and great potential in various physical, chemical, and biological fields. In this article, water-soluble and biocompatible PEGylated BP nanoparticles with a high yield were prepared by one-pot solventless high energy mechanical milling technique. The resultant BP nanoparticles can efficiently convert near infrared (NIR) light into heat, and exhibit excellent photostability, which makes them suitable as a novel nanotheranostic agent for photoacoustic (PA) imaging and photothermal therapy of cancer. The in-vitro results demonstrate the excellent biocompatibility of PEGylated BP nanoparticles, which can be used for photothermal ablation of cancer cells under irradiation with NIR light. The in-vivo PA images demonstrate that these BP nanoparticles can be efficiently accumulated in tumors through the enhanced permeability retention effect. The resultant BP nanoparticles can be further utilized for photothermal ablation of tumors by irradiation with NIR light. The tumor-bearing mice were completely recovered after photothermal treatment with BP nanoparticles, in comparison with mice from control groups. Our research highlights the great potential of PEGylated BP nanoparticles in detection and treatment of cancer.