Magnetic nanoparticles have attracted attention in modern medicine and pharmacology owing to their potential usefulness as contrast agents for MRI, as colloidal mediators for cancer magnetic hyperthermia or as active constituents of drug-delivery platforms. This review examines these in vivo applications through an understanding of the involved problems and the current and future possibilities for resolving them. A special emphasis is placed upon magnetic nanoparticle requirements from a physical viewpoint (e.g., relaxivity for MRI, specific absorption rate for hyperthermia and magnetic guidance), the factors affecting their biodistribution after intravenous injection (e.g., size and surface hydrophobic/hydrophilic balance) and the solutions envisaged for enhancing their half-life in the blood compartment and in targeting tumor cells.