Cancer is a disease that has resulted in millions of deaths worldwide. The current conventional therapies utilized for the treatment of cancer have detrimental side effects. This led scientific researchers to explore new therapeutic avenues with an improved benefit to risk profile. Researchers have found nanoparticles, particles between the 1 and 100 nm range, to be encouraging tools in the area of cancer. Magnetic nanoparticles are one of many available nanoparticles at present. Magnetic nanoparticles have increasingly been receiving a considerable amount of attention in recent years owing to their unique magnetic properties, among many others. Magnetic nanoparticles can be controlled by an external magnetic field, signifying their ability to be site specific. The most popular approaches for the synthesis of magnetic nanoparticles are co-precipitation, thermal decomposition, hydrothermal, and polyol synthesis. The functionalization of magnetic nanoparticles is essential as it significantly increases their biocompatibility. The most utilized functionalization agents are comprised of polymers. The synthesis and functionalization of magnetic nanoparticles will be further explored in this review. The biomedical applications of magnetic nanoparticles investigated in this review are drug delivery, magnetic hyperthermia, and diagnosis. The diagnosis aspect focuses on the utilization of magnetic nanoparticles as contrast agents in magnetic resonance imaging. Clinical trials and toxicology studies relating to the application of magnetic nanoparticles for the diagnosis and treatment of cancer will also be discussed in this review.