The unique properties of magnetic nanoparticles have led them to be considered materials with significant potential in the biomedical field. Nanometric size, high surface-area ratio, ability to function at molecular level, exceptional magnetic and physicochemical properties, and more importantly, the relatively easy tailoring of all these properties to the specific requirements of the different biomedical applications, are some of the key factors of their success. In this paper, we will provide an overview of the state of the art of different aspects of magnetic nanoparticles, specially focusing on their use in biomedicine. We will explore their magnetic properties, synthetic methods and surface modifications, as well as their most significative physicochemical properties and their impact on the in vivo behaviour of these particles. Furthermore, we will provide a background on different applications of magnetic nanoparticles in biomedicine, such as magnetic drug targeting, magnetic hyperthermia, imaging contrast agents or theranostics. Besides, current limitations and challenges of these materials, as well as their future prospects in the biomedical field will be discussed.