The progress in the development of magnetic nanoparticle based therapies for various biomedical applications is reviewed here. Most significantly, magnetic nanoparticles have been widely used in drug delivery and hyperthermia treatment for cancer. However, recent applications of magnetic nanoparticles demonstrate their promise towards decreasing implant infection and increasing tissue growth. To build the most effective magnetic nanoparticle systems for various biomedical applications, particle characteristics including size, surface chemistry, magnetic properties and toxicity have to be fully investigated. In this review, several new applications of magnetic nanoparticles in the medical arena as well as remaining challenges for such clinical use are discussed.