Here we provide a complete review on the use of dynamic light scattering (DLS) to study the size distribution and colloidal stability of magnetic nanoparticles (MNPs). The mathematical analysis involved in obtaining size information from the correlation function and the calculation of Z-average are introduced. Contributions from various variables, such as surface coating, size differences, and concentration of particles, are elaborated within the context of measurement data. Comparison with other sizing techniques, such as transmission electron microscopy and dark-field microscopy, revealed both the advantages and disadvantages of DLS in measuring the size of magnetic nanoparticles. The self-assembly process of MNP with anisotropic structure can also be monitored effectively by DLS.