Nanobodies as imaging agents and drug conjugates have shown great potential for cancer diagnostics and therapeutics. However, site-specific modification of a nanobody with microbial transglutaminase (mTGase) encounters problems in protein separation and purification. Here, we describe a facile yet reliable strategy of immobilizing mTGase onto magnetic beads for site-specific nanobody modification. The mTGase immobilized on magnetic beads (MB-mTGase) exhibits catalytic activity nearly equivalent to that of the free mTGase, with good reusability and universality. Magnetic separation simplifies the protein purification step and reduces the loss of nanobody bioconjugates more effectively than size exclusion chromatography. Using MB-mTGase, we demonstrate site-specific conjugation of nanobodies with fluorescent dyes and polyethylene glycol molecules, enabling targeted immunofluorescence imaging and improved circulation dynamics and tumor accumulation in vivo. The combined advantages of MB-mTGase method, including high conjugation efficiency, quick purification, less protein loss, and recycling use, are promising for site-specific nanobody functionalization and biomedical applications.