The emergence of nanomedicine offers renewed promise in the diagnosis and treatment of diseases. Due to their unique physical and chemical properties, iron oxide nanoparticles (IONPs) exhibit widespread application in the diagnosis and treatment of various ailments, particularly tumors. IONPs have magnetic resonance (MR) T1/T2 imaging capabilities due to their different sizes. In addition, IONPs also have biocatalytic activity (nanozymes) and magnetocaloric effects. They are widely used in chemodynamic therapy (CDT), magnetic hyperthermia treatment (MHT), photodynamic therapy (PDT), and drug delivery. This review outlines the synthesis, modification, and biomedical applications of IONPs, emphasizing their role in enhancing diagnostic imaging (including single-mode and multimodal imaging) and their potential in cancer therapies (including chemotherapy, radiotherapy, CDT, and PDT). Furthermore, we briefly explore the challenges in the clinical application of IONPs, such as surface modification and protein adsorption, and put forward opinions on the clinical transformation of IONPs.