Local heating can be produced by iron oxide nanoparticles (IONPs) when exposed to an alternating magnetic field (AMF). To measure the temperature profile at the nanoparticle surface with a subnanometer resolution, here we present a molecular temperature probe based on the thermal decomposition of a thermo-sensitive molecule, namely, azobis[N-(2-carboxyethyl)-2-methylpropionamidine]. Fluoresceineamine (FA) was bound to the azo molecule at the IONP surface functionalized with poly(ethylene glycol) (PEG) spacers of different molecular weights. Significant local heating, with a temperature increase up to 45 °C, was found at distances below 0.5 nm from the surface of the nanoparticle, which decays exponentially with increasing distance. Furthermore, the temperature increase was found to scale linearly with the applied field at all distances. We implemented these findings in an AMF-triggered drug release system in which doxorubicin was covalently linked at different distances from the IONP surface bearing the same thermo-labile azo molecule. We demonstrated the AMF triggered distance-dependent release of the drug in a cytotoxicity assay on KB cancer cells.