Magnetic nanoparticles (MNPs) represent a subclass within the overall category of nanomaterials and are widely used in many applications, particularly in the biomedical sciences such as targeted delivery of drugs or genes, in magnetic resonance imaging, and in hyperthermia (treating tumors with heat). Although the potential benefits of MNPs are considerable, there is a distinct need to identify any potential toxicity associated with these MNPs. The potential of MNPs in drug delivery stems from the intrinsic properties of the magnetic core combined with their drug loading capability and the biomedical properties of MNPs generated by different surface coatings. These surface modifications alter the particokinetics and toxicity of MNPs by changing protein-MNP or cell-MNP interactions. This review contains current advances in MNPs for drug delivery and their possible organ toxicities associated with disturbance in body iron homeostasis. The importance of protein-MNP interactions and various safety considerations relating to MNP exposure are also addressed.