Recently, magnetic nanomaterials have emerged as multifunctional materials for a wide range of biomedical applications. Functional magnetic iron oxide nanoparticles (FMIONs) are typical magnetic nanomaterials with inherent advantages for disease diagnosis, prevention, and treatment: high specific surface area, excellent superparamagnetism, good colloidal stability, and remarkable biosafety. Therefore, FMION‐based biomedicine has advanced at an unprecedented rate in recent years. However, the performance of FMIONs cannot yet meet complicated physiological circumstances. To overcome these limitations, researchers have designed and manipulated the geometric shapes, sizes, compositions, and surfaces to endow these FMIONs with high performance. This review summarizes recent advances in the controlled synthesis of FMIONs, cover corresponding theories of nucleation and growth in solution, and the tuning of FMION properties for disease diagnosis and therapy. After discussing the biomedical applications in cancer theranostics—tumor hyperthermia, magnetic resonance imaging and drug delivery system—in detail, the review concludes with current challenges and outlooks for the development of FMIONs.