Nanotechnology is an emerging technique drawing increasing attentions in biomedical, electronic, environmental, and industrial application. Nanoparticles (NPs) possess unique optical, electrical, catalytic, and thermal properties, among which magnetic NPs (MNPs) are one of the most important groups with excellent superparamagnetism property, large surface area, and biocompatibility. In this review, methods for synthesizing and functionalizing MNPs are summarized and linked to their applications in environmental science as either adsorbents or catalysts for removing contaminants from environmental matrices, illustrating stronger reactivity, higher removal capacity, and fast kinetics. Additionally, we also comprehensively discuss the application of MNPs as (bio)sensors to selectively and sensitively detect the presence of environmental contaminants or pathogenic bacteria. This work summarizes the recent progresses of using MNPs as powerful tools in environmental science and engineering, raising their state-of-art application from environmental perspectives and benefiting researchers interested in NPs and environmental studies.