We report here ligand-exchange-based synthesis of magnetic-plasmonic and magnetic-fluorescent hybrid nanoparticles such as gamma-Fe2O3-QD, gamma-Fe2O3-Au, and gamma-Fe2O3-Ag. In this approach the Surface ligands of hydrophobic gamma-Fe2O3 nanoparticles are replaced by terminal amine/carboxylate functional groups of core-shell type hydrophilic QD/Au/Ag nanoparticle, with a resultant water-soluble hybrid nanoparticle. These water-soluble hybrid materials exhibit good colloidal stability, retain the property of each component nanoparticle, and are similar to 20-35 nm in diameter. Various functional nanoparticles can be derived from these hybrid nanoparticles for simultaneous optical sensing, imaging, and magnetic separation applications. Glucose, oleylamine, and TAT peptide-functionalized nanoprobes are prepared from these hybrid nanoparticles. Glucose-functionalized gamma-Fe2O3-AU and gamma-Fe2O3-Ag are used for plasmon-based optical detection of protein as well as magnetic separation applications. TAT peptide- and oleylamine-functionalized gamma-Fe2O3-QD are used for fluorescence-based cell imaging and magnetic cell separation.