Magnetic sensing technology offers an attractive alternative for in vivo tracking with much better performance than RF and ultrasound technologies. In this paper, an efficient in vivo magnetic tracking system is presented. The proposed system is intended to localize an endoscopic capsule which delivers biomarkers around specific locations of the gastrointestinal (GI) tract. For efficiently localizing a magnetic marker inside the capsule, a mathematical model has been developed for the magnetic field around a cylindrical magnet and used with a localization algorithm that provides minimum error and fast computation. The proposed tracking system has much reduced complexity compared to the ones reported in the literature to date. Laboratory tests and in vivo animal trials have demonstrated the suitability of the proposed system for tracking a magnetic marker with expected accuracy.