The cotton leafworm, Spodoptera littoralis, is a voracious pest that poses significant agricultural challenges. Traditional pesticide applications have not only fostered resistance in S. littoralis but also have had detrimental environmental impacts. Nanotechnology offers a promising alternative through nano-pesticide formulations. The controlled-release (CR) nanoformulations of the neonicotinoid imidacloprid were characterized by various spectroscopic techniques, including transmission and scanning electron microscopy, atomic force microscopy, and Fourier transform infrared spectroscopy. Toxicological and biochemical impacts of standard and CR neonicotinoid imidacloprid nanoformulation, encapsulated with chitosan-dextran sulfate (CS-DS) on 4th-instar larvae of S. littoralis were evaluated. Our findings indicate that both the unencapsulated and CS-DS encapsulated imidacloprid nanoparticles (NPs) exhibit increased toxicity over time, with the encapsulated form showing the highest lethality. Bioaccumulation of imidacloprid was most pronounced in the insect gut, followed by the brain and hemolymph. Exposure to both forms of imidacloprid resulted in a significant reduction in energy reserve levels, as well as decreased glutathione and acetylcholinesterase activity in the surviving larvae. Conversely, markers of oxidative stress, were significantly elevated. Notably, these effects were more pronounced with the imidacloprid-loaded CS-DS NPs than with the unencapsulated pesticide. Our research suggests that CR nanoformulations of imidacloprid may mitigate the development of resistance in S. littoralis by reducing the quantity of pesticide reaching the target site, thereby offering a more sustainable pest management strategy.