Magnetic nanoparticles (MNPs) are a new and promising addition to the spectrum of biomedicines. Their promise revolves around the broad versatility and biocompatibility of the MNPs and their unique physicochemical properties. Guided by applied external magnetic fields, MNPs represent a cutting-edge tool designed to improve diagnosis and therapy of a broad range of inflammatory, infectious, genetic and degenerative diseases. Magnetic hyperthermia, targeted drug and gene delivery, cell tracking, protein bioseparation and tissue engineering are but a few applications being developed for MNPs. MNPs toxicities linked to shape, size and surface chemistry are real and must be addressed before clinical use is realized. This article presents both the promise and perils of this new nanotechnology, with an eye towards opportunity in translational medical science.