Target-specific nanoparticles with good stability, dispersibility and targeting properties are very desirable for in vivo applications like diagnosis and therapy. In this work, the potential of covalently biotinylated magnetic nanoparticles for targeting tumours has been analysed by various in vitro and in vivo studies. For quantitatively estimating the amount of biotin bound to the surface of magnetic nanoparticles, 4-Hydroxyazobenzene-2-carboxylic acid dye was used. Varying the pH conditions changes, the mean size and zeta potential and transverse relaxivity slightly, affects the contrast enhancing capability of the synthesized biotinylated magnetic nanoparticles minimally. Cytotoxicity of the synthesized nanoconjugate was analysed in two different cell lines HeLa and A549 by using sulpho-rhodamine B assay and tumour cell-targeting capability was analysed in HeLa cell lines by using confocal microscopy. The results of cytotoxicity analysis combined with intracellular uptake, biodistribution and gamma scintigraphy prove the tumour-targeting potential of the synthesized biocompatible biotinylated magnetic nanoparticle conjugate.