There is considerable interest in developing magnetic nanoparticles and their surface modifications with therapeutic agents. The study involves the synthesis of biocompatible HPPH [2-(1- Hexyloxyethyl)-2-devinyl pyropheophorbide-a], a cancer drug coated with iron oxide nanoparticles and to evaluate their efficacy as MRI contrast agents. A simple and quick microwave method to prepare Fe3O4n anoparticles has been developed. Microwave heating offers potential advantages over conventional heating to enhance chemical reactions. The relaxivities (r2 ) of the coated magnetic nanoparticles were also measured and the results showed that r2 of the Fe complex was higher than that of MRI contrast agent Gd-DTPA used in clinics. The drug was successfully conjugated to the Fe3O4n anoparticles which can be used for various applications such as photodynamic therapy, hyperthermia etc.