The manipulation of droplets plays a vital role in biomedicine, chemistry, and hydromechanics, especially in microfluidics. Magnetic droplet manipulation has emerged as a prominent and advanced technique in comparison to other modes such as dielectric infiltration, optical radiation, and surface acoustic waves. Its notable progress is attributed to several advantages, including excellent biocompatibility, remote and non-contact control, and instantaneous response. This review provides a comprehensive overview of recent developments in magnetic droplet manipulation and its applications within the biomedical field. Firstly, the discussion involves an examination of the distinctive features associated with droplet manipulation based on both permanent magnet and electromagnet principles, along with a thorough exploration of the influencing factors impacting magnetic droplet manipulation. Additionally, an in-depth review of magnetic actuation mechanisms and various droplet manipulation methods is presented. Furthermore, the article elucidates the biomedical applications of magnetic droplet manipulation, particularly its role in diagnostic assays, drug discovery, and cell culture. Finally, the highlights and challenges of magnetic droplet manipulation in biomedical applications are described in detail.