Magneto-responsive hydrogels (MRHs) have attracted considerable attention in various applications owing to their smart response to an externally applied magnetic field. However, their practical uses in biomedical fields are limited by their weak mechanical properties and possible toxicity to the human body. In this study, tough, biocompatible, and magneto-responsive nanocomposite hydrogels (MR_NCHs) were developed by the in-situ free-radical polymerization of N, N-dimethylacrylamide (DMAAm) and laponite and Fe3O4 nanoparticles. The effects of the concentrations of DMAAm, water, and laponite and Fe3O4 nanoparticles in the pre-gel solutions or mixtures on the viscoelastic and mechanical properties of the corresponding hydrogels were examined by performing rheological and tensile tests, through which the mixture composition producing the best MR_NCH system was optimized. The effects were also explained by the possible network structures of the MR_NCHs. Moreover, the morphology, chemical structure, and thermal and mechanical properties of the MR_NCHs were analyzed, while comparing with those of the poly(DMAAm) (PDMAAm) hydrogels and laponite/PDMAAm NCHs. The obtained optimal MR_NCH exhibited noticeable magnetorheological (MR) behavior, excellent mechanical properties, and good biocompatibility. This study demonstrates how to optimize the best Fe3O4/laponite/PDMAAm MR_NCH system and its potential as a soft actuator for the pharmaceutical and biomedical applications.