Composite nanofibers of biopolymers and inorganic materials have been widely explored as tissue engineering scaffolds because of their superior structural, mechanical and biological properties. In this study, magnesium ferrite (Mg-ferrite) based composite nanofibers were synthesized using an electrospinning technique. Mg-ferrite nanoparticles were first synthesized using the reverse micelle method, and then blended in a mixture of polycaprolactone (PCL), a synthetic polymer, and Aloe vera, a natural polymer, to create magnetic nanofibers by electrospinning. The morphology, structural and magnetic properties, and cellular compatibility of the magnetic nanofibers were analyzed. Mg-ferrite/PCL/Aloe vera nanofibers showed good uniformity in fiber morphology, retained their structural integrity, and displayed magnetic strength. Experimental results, using cell viability assay and scanning electron microscopy imaging showed that magnetic nanofibers supported 3T3 cell viability. We believe that the new composite nanofibrous membranes developed in this study have the ability to mimic the physical structure and function of tissue extracellular matrix, as well as provide the magnetic and soluble metal ion attributes in the scaffolds with enhanced cell attachment, and thus improve tissue regeneration.