The invention provides for water-dispersible microparticles comprising magnetic material and organic substance, such as a pharmaceutical or a pigment, that constitute in totality at least 50%, or preferably more that 70%, of the dry mass of the particle. The method of making such microparticles is also provided, comprising coating of the magnetic material in an aqueous colloid form with a layer of a polyelectrolyte, and combining the coated colloid with the organic substance having ionic charge opposite to that of the polyelectrolyte. When the organic substance is poorly soluble in water, the combining comprises dissolving of the substance in a water-miscible organic solvent, and combining said solution with the polyelectrolyte-coated magnetic colloid. The magnetic pharmaceutical microparticles are useful for magnetically-guided drug delivery, and/or for non-invasive monitoring of the drug distribution in the body. Magnetic microparticles comprising dyes and pigments are useful in magnetic inks.