Biomineralization is an elaborate process that produces complex nano-structures consisting of organic and inorganic components of uniform size and highly ordered morphology that self-assemble into structures in a hierarchical manner. Magnetotactic bacteria synthesize nano-sized magnetite crystals that are highly consistent in size and morphology within bacterial species; each particle is surrounded by a thin organic membrane, which facilitates their use for various biotechnological applications. Recent molecular studies, including mutagenesis, whole genome, transcriptome and comprehensive proteome analyses, have elucidated the processes important to bacterial magnetite formation. Some of the genes and proteins identified from these studies have enabled us, through genetic engineering, to express proteins efficiently, with their activity preserved, onto bacterial magnetic particles, leading to the simple preparation of functional protein-magnetic particle complexes. This review describes the recent advances in the fundamental analysis of bacterial magnetic particles and the development of surface-protein-modified magnetic particles for biotechnological applications.