Recently, magnetic-based theranostic nanoparticle (MBTN) systems have been studied, researched, and applied extensively to detect and treat various diseases including cancer. Theranostic nanoparticles are advantageous in that the diagnosis and treatment of a disease can be performed in a single setting using combinational strategies of targeting, imaging, and/or therapy. Of these theranostic strategies, magnetic-based systems containing magnetic nanoparticles (MNPs) have gained popularity because of their unique ability to be used in magnetic resonance imaging, magnetic targeting, hyperthermia, and controlled drug release. To increase their effectiveness, MNPs have been decorated with a wide variety of materials to improve their biocompatibility, carry therapeutic payloads, encapsulate/bind imaging agents, and provide functional groups for conjugation of biomolecules that provide receptor-mediated targeting of the disease. This review summarizes recent patents involving various polymer coatings, imaging agents, therapeutic agents, targeting mechanisms, and applications along with the major requirements and challenges faced in using MBTN for disease management.