We experimentally demonstrate that gain materials properly encapsulated into the shell surrounding metal nanoparticles (NPs) are responsible for the modification of the overall plasmon response of engineered nanostructures. A comparison between designed systems based on functionalized core–shell NPs having different encapsulated dye molecules is presented. Experimental observations of Rayleigh scattering enhancement, accompanied by an increase of transmission as a function of gain, reveal striking optical loss compensation effects. Fluorescence lifetime measurements demonstrate a quenching of dye photoluminescence in functionalized core–shell NP samples with respect to pure dye solutions, confirming the strong resonant coupling occurring between the gain medium and gold NPs. Experimental evidence of a selective modification of the gain functionalized core–shell Au NP extinction curve is found, in good agreement with the results of a simplified theoretical model. The model verifies the causality principle through Kramers–Kronig dispersion relations for the investigated gain functionalized plasmonic nanostructure.