This work reports the synthesis and the characterization of water-soluble and biocompatible photosensitizer (PS)-conjugated magnetic nanoparticles composed of a cobalt ferrite (CoFe2O4) magnetic core coated with a biocompatible hematoporphyrin (HP) shell. The photo-functional cobalt ferrite magnetic nanoparticles (CoFe2O4@HP) were uniform in size, stable against PS leaching, and highly efficient in the photo-generation of cytotoxic singlet oxygen under visible light. With the CoFe2O4@HP, we acquired in vitro MR images of cancer cells (PC-3) and confirmed good biocompatibility of the CoFe2O4@HP in both normal and cancer cells. In addition, we confirmed the potential of the CoFe2O4@HP as an agent for photodynamic therapy (PDT) applications. The photodynamic anticancer activities in 25, 50, and 100 μg/mL of CoFe2O4@HP were measured and found to exceed 99% (99.0, 99.4, and 99.5%) (p < 0.002). The photodynamic anticancer activity was 81.8% (p < 0.003). From these results, we suggest that our CoFe2O4@HP can be used safely as a type of photodynamic cancer therapy with potential as a therapeutic agent having good biocompatibility. Moreover, these photo-functional magnetic nanoparticles are highly promising for applications in versatile imaging diagnosis and as a therapy tool in biomedical engineering.