Photoacoustic (PA) imaging is a functional and molecular imaging technique capable of high sensitivity and spatiotemporal resolution at depth. Widespread use of PA imaging, however, is limited by currently available contrast agents, which either lack PA-signal-generation ability for deep imaging or their absorbance spectra overlap with hemoglobin, reducing sensitivity. Here we report on a PA contrast agent based on targeted liposomes loaded with J-aggregated indocyanine green (ICG) dye (i.e., PAtrace) that we synthesized, bioconjugated, and characterized to addresses these limitations. We then validated PAtrace in phantom, in vitro, and in vivo PA imaging environments for both spectral unmixing accuracy and targeting efficacy in a folate receptor alpha-positive ovarian cancer model. These study results show that PAtrace concurrently provides significantly improved contrast-agent quantification/sensitivity and SO2 estimation accuracy compared to monomeric ICG. PAtrace’s performance attributes and composition of FDA-approved components make it a promising agent for future clinical molecular PA imaging.