Aggressive surgical resection is the primary therapy for glioma. However, aggressive resection may compromise functional healthy brain tissue. Currently, there are no objective cues for surgeons to distinguish healthy tissue from tumor and determine tumor borders; surgeons skillfully rely on subjective means such as tactile feedback. This often results in incomplete resection and recurrence. The objective of the present study was to design, develop, and evaluate, in vitro and in vivo, a nanoencapsulated visible dye for intraoperative, visual delineation of tumor margins in an invasive tumor model. Liposomal nanocarriers containing Evans blue dye (nano-EB) were developed, characterized, and tested for safety in vitro and in vivo. 3RT1RT2A glioma cells were implanted into brains of Fischer 344 rats. Nano-EB or EB solution was injected via tail vein into tumor-bearing animals. To assess tumor staining, tissue samples were analyzed visibly and using fluorescence microscopy. Area, perimeter ratios, and Manders overlap coefficients were calculated to quantify extent of staining. Nano-EB clearly marked tumor margins in the invasive tumor model. Area ratio of nano-EB staining to tumor was 0.89 ± 0.05, perimeter ratio was 0.94 ± 0.04, Manders R was 0.51 ± 0.08, and M1 was 0.97 ± 0.06. Microscopic tumor border inspection under high magnification verified that nano-EB did not stain healthy tissue. Nano-EB clearly aids in distinguishing tumor tissue from healthy tissue in an invasive tumor model, while injection of unencapsulated EB results in false identification of healthy tissue as tumor due to diffusion of dye from the tumor into healthy tissue.