The growing interest in magnetic materials as a universal tool has been shown by an increasing number of scientific publications regarding magnetic materials and its various applications. Substantial progress has been recently made on the synthesis of magnetic iron oxide particles in terms of size, chemical composition, and surface chemistry. In addition, surface layers of polymers, silica, biomolecules, etc., on magnetic particles, can be modified to obtain affinity to target molecules. The developed magnetic iron oxide particles have been significantly utilized for diagnostic applications, such as sample preparations and biosensing platforms, leading to the selectivity and sensitivity against target molecules and the ease of use in the sensing systems. For the process of sample preparations, the magnetic particles do assist in target isolation from biological environments, having non-specific molecules and undesired molecules. Moreover, the magnetic particles can be easily applied for various methods of biosensing devices, such as optical, electrochemical, and magnetic phenomena-based methods, and also any methods combined with microfluidic systems. Here we review the utilization of magnetic materials in the isolation/preconcentration of various molecules and cells, and their use in various techniques for diagnostic biosensors that may greatly contribute to future innovation in point-of-care and high-throughput automation systems.