Magnetic nanoparticles are applicable in imaging, diagnosis, therapy, and biomaterial separation. The magnetic nanoparticles comprise a core represented as Fe.sub.xM.sup.a.sub.vZ.sub.y and a shell of an inner-transition element M.sup.b or the compound thereof, wherein M.sup.a is an inner-transition element, Z is an element of the group Vla, x is greater or equal to 0, and v, y are positive numbers. The surface of the shell is optionally modified by liposome, polymer, aliphatic compound, aromatic compound or combinations thereof.