A one-of-a-kind biocompatible magnetic nanocomposite microcapsule is developed as an in-line passive valve that can be integrated with micropumps and microfluidics. The magnetic nanocomposites act as the core for building a valve that utilizes the magnetic force attraction for sealing the microfluidic channels. The nanocomposites, molded with commercial microtubings, are prepared by incorporating Fe3O4 nanoparticles into polyethylene-glycol (PEG). Parylene-C provides a flexible, biocompatible shell and moisture barrier for the microcapsule that enables deformation and sealing to the microfluidic channel wall. The highly customizable valve design offers easy scalability, and simplicity for integration into microfluidic systems. The presented magnetically-responsive microcapsule demonstrates reliable performance as a passive one-way valve that exhibits unique features and capabilities including effective flow-rectification with steady flows, extremely low leakage flows from backpressures at a rate of 4.7 nL/min kPa−1, successfully block 99.96% of the diffusion, and extremely low inlet flow opening pressure of 2.1 kPa.