Early diagnosis of cancer greatly increases the chances of successful treatment by radical resection. The sensitivity of magnetic resonance imaging (MRI) techniques for detecting early stage tumors can be increased with the assistance of a positive MRI contrast agent. However, the traditional positive MRI contrast agents, such as Gd-chelates and Gd-based inorganic nanoparticles, are often limited by their cytotoxicity and low specificity. Here, we propose a new design of MRI contrast agent based on gadolinium oxide nanocrystals (GON) for targeted imaging and cancer early diagnosis with good biocompatibility. The GON were prepared using a polyol method and then encapsulated into albumin nanoparticles (AN), which were cross-linked with glutaraldehyde and found to exhibit bright and stable autofluorescence without conjugation to any fluorescent agent. After that, a target molecule, folic acid (FA), was conjugated onto the surface of the GON-loaded AN (GON-AN) to construct a GON-AN-FA composite. The as-prepared nanoparticles are biocompatible and stable in serum. The results of MRI relaxation studies show that the longitudinal relaxivities (r1) of GON-AN (11.6 mM-1 s-1) and GON-AN-FA (10.8 mM-1 s-1) are much larger than those of traditional positive MRI contrast agents, such as Magnevist (3.8 mM-1 s-1). The results of cell viability assays indicate that GON-AN and GON-AN-FA are almost non-cytotoxic. Furthermore, the specificities of GON-AN and GON-AN-FA were evaluated with two kinds of cancer cells which overexpress folate receptor alpha (FRα). The results reinforce that the autofluorescent GON-AN-FA is able to target cancer cells via recognition of the ligand FA and the receptor FRα. Therefore, our autofluorescent GON-AN-FA possessing a large longitudinal relaxivity and good biocompatibility represents a significant advance for the targeted imaging and early diagnosis of cancer.