Frequent outbreaks of food-borne pathogens, particularly E. coli O157:H7, continue to impact human health and the agricultural economy tremendously. The required cell count for this pathogenic strain of E. coli O157:H7 is relatively low and hence it is vital to detect at low colony forming unit (CFU) counts. Available detection methods, though sensitive, fall short in terms of timeliness and often require extensive sample processing. To overcome these limitations, we propose a novel magneto-plasmonic nanosensor (MPnS) by integrating surface plasmon resonance (SPR) properties with spin–spin magnetic relaxation (T2 MR) technology. We engineered MPnS by encapsulating several gold nanoparticles (GNPs) within the polymer-coating of iron oxide nanoparticles (IONPs). First, the polyacrylic acid (PAA)-coated IONPs were synthesized using a solvent precipitation method, then gold chloride solution was used to synthesize GNPs and encapsulate them within the PAA-coatings of IONPs in one step. A magnetic separation technique was used to purify the MPnS and the presence of GNPs within IONPs was characterized using transmission electron microscopy (TEM), energy dispersive x-ray spectroscopy (EDS), and other spectroscopic methods. The synthesized MPnS exhibits MR relaxation properties while possessing amplified optical properties than conventional GNPs. This allows for rapid and ultrasensitive detection of E. coli O157:H7 by SPR, T2 MR, and colorimetric readout. Experiments conducted in simple buffer and in milk as a complex media demonstrated that our MPnS-based assay could detect as low as 10 CFUs of this pathogenic strain of E. coli O157:H7 in minutes with no cross-reactivity. Overall, the formulated MPnS is robust and holds great potential for the ultrasensitive detection of E. coli O157:H7 in a simple and timely fashion. Moreover, this platform is highly customizable and can be used for the detection of other foodborne pathogens.