Due to their biocompatibility and small size, iron oxide magnetic nanoparticles (MNP) can be guided to virtually every biological environment. MNP are susceptible to external magnetic fields and can thus be used for transport of drugs and genes, for heat generation in magnetic hyperthermia or for contrast enhancement in magnetic resonance imaging of biological tissue. At the same time, their magnetic properties allow one to develop sensitive and specific measurement methods to non-invasively detect MNP, to quantify MNP distribution in tissue and to determine their binding state. In this article, we review the application of magnetorelaxometry (MRX) for MNP detection. The underlying physical properties of MNP responsible for the generation of the MRX signal with its characteristic parameters of relaxation amplitude and relaxation time are described. Existing single and multi-channel MRX devices are reviewed. Finally, we thoroughly describe some applications of MRX to cellular MNP quantification, MNP organ distribution and MNP-based binding assays. Providing specific MNP signals, a detection limit down to a few nanogram MNP, in-vivo capability in conscious animals and measurement times of a few seconds, MRX is a valuable tool to improve the application of MNP for diagnostic and therapeutic purposes.