A facile polyol approach for preparing low‐Curie‐temperature (TC) gadolinium‐doped iron oxide nanoparticles (GdIO NPs) for targeted magnetic hyperthermia and chemotherapy coupled with T1–T2 dual‐model magnetic resonance (MR) imaging (where T1 and T2 are the longitudinal and transverse relaxation times, respectively) is reported. A small amount of Gd doping decreases the TC of iron oxide down to about 400 K. In the presence of ethanolamine, controlled polyol synthesis leads to the formation of low‐TC, highly magnetic (52.87 emu g–1), and size‐controlled (ca. 10 nm) GdIO NPs. A further conjugation with folate and a chemotherapeutic drug has been developed, and the whole system is used for in vitro magneto‐chemotherapy (magnetic hyperthermia and chemotherapy) for cancer treatment. The synthesized GdIO NPs are stable colloids that are hemocompatible and cytocompatible over a wide concentration range and have a high affinity towards cancer cells. The release of a chemotherapeutic drug from the GdIO NPs significantly affects cancer cell viability, and the T1–T2 dual‐model magnetic resonance enhances bioimaging in a breast cancer cell model. We suggest that the chemotherapeutic‐drug‐conjugated GdIO NPs have great potential for cell targeting and magnetic resonance imaging in cancer magneto‐chemotherapy.