In recent decades, magnetic iron nanoparticles (NPs) have attracted much attention due to properties such as superparamagnetism, high surface area, large surface-to-volume ratio, and easy separation under external magnetic fields. Therefore, magnetic iron oxides have potential for use in numerous applications, including magnetic resonance imaging contrast enhancement, tissue repair, immunoassay, detoxification of biological fluids, drug delivery, hyperthermia, and cell separation. This review provides an updated and integrated focus on the fabrication and characterization of suitable magnetic iron NPs for biotechnological applications. The possible perspective and some challenges in the further development of these NPs are also discussed.