Biomedical applications of Magnetic Nanoparticles (MNPs) are creating a major impact on disease diagnosis and nanomedicine or a combined platform called theranostics. A significant progress has been made to engineer novel and hybrid MNPs for their multifunctional modalities such as imaging, biosensors, chemotherapeutic or photothermal and antimicrobial agents. MNPs are successfully applied in biomedical applications due to their unique and tunable properties such as superparamagnetism, stability, and biocompatibility. Approval of ferumoxytol (feraheme) for MRI and the fact that several Superparamagnetic Iron Oxide Nanoparticles (SPIONs) are currently undergoing clinical trials have paved a path for future MNPs formulations. Intensive research is being carried out in designing and developing novel nanohybrids for multiple applications in nanomedicine.The objective of the present review is to summarize recent developments of MNPs in imaging modalities like MRI, CT, PET and PA, biosensors and nanomedicine including their role in targeting and drug delivery. Relevant theory and examples of the use of MNPs in these applications have been cited and discussed to create a thorough understanding of the developments in this field.MNPs have found widespread use as contrast agents in imaging modalities, as tools for bio-sensing, and as therapeutic and theranostics agents. Multiple formulations of MNPs are in clinical testing and may be accepted in clinical settings in near future.