Magnetic nanoparticles offer potential advances in cancer treatment. One example is cancer theranostics, which refers to the combination of a diagnostic tool, i.e., magnetic resonance (MR) imaging, and therapeutic entities such as drugs, oligonucleotides, antibodies, and peptides. They can be conjugated with bioactive molecules and have the ability to form a magnetic field gradient under an external magnetic field. They can offer a variety of active drug delivery and imaging strategies along with modalities such as magnetic hyperthermia. Imaging with magnetic nanoparticles can facilitate more effective cancer therapy through more well informed decision-making. In this article, we review notable progress in magnetic particle design, including surface modifications and multi-functionalization, and we discuss the recent bioapplications of magnetic nanoparticles in simultaneous cancer imaging and therapy.