Among the plethora of affinity biosensor systems based on biomolecular recognition and labeling assays, magnetic labeling and detection is emerging as a promising new approach. Magnetic labels can be non-invasively detected by a wide range of methods, are physically and chemically stable, relatively inexpensive to produce, and can be easily made biocompatible. Here we provide an overview of the various approaches developed for magnetic labeling and detection as applied to biosensing. We illustrate the challenges to integrating one such approach into a complete sensing system with a more detailed discussion of the compact Bead Array Sensor System developed at the U.S. Naval Research Laboratory, the first system to use magnetic labels and microchip-based detection.