Magnetic poly epsilon-caprolactone (PCL) nanoparticles were prepared in a well shaped spherical form by the o/w emulsion method. The influence of some preparative variables on the size and surface property was investigated. Nanoparticles were smooth, well individualized and homogeneous in size. The presence of magnetite and its superparamagnetic characteristic were confirmed by transmission electron microscope (TEM), Fourier transform infrared spectroscopy (FT-IR) and vibrating sample magnetometer (VSM), respectively. The anti-cancer drug was encapsulated in the magnetic nanoparticle during preparation. A typical release behavior was observed for 30 days. In vitro experiment of magnetic susceptibility under external magnetic field demonstrated that the magnetic PCL nanoparticles have sufficient magnetic susceptibility for a potential magnetic drug carrier for targeted delivery.