We describe the synthesis, characterization, and use of hybrid nanoparticles with a superparamagnetic iron oxide (SPIO) core and a gold nanoshell. These multifunctional nanoparticles, designated SPIO-Au nanoshells, displayed superparamagnetic characteristics and a significant absorbance in the near-infrared (NIR) region of the electromagnetic spectrum. In addition, they exhibited high transverse relaxivity, r 2 , and a large r 2 /r 1 ratio and therefore could be imaged by MRI to obtain T 2 -weighted images. Moreover, SPIO-Au nanoshells showed efficient photo-thermal effect when exposed to NIR light. The use of SPIO-Au nanoshells, with their combination of unique magnetic and optical properties, should enhance the efficacy of nanoshellmediated photo-thermal therapy by making it possible to direct more nanoparticles to tumors through the application of external magnetic field and by permitting real-time in vivo MRI imaging of the distribution of the nanoparticles before, during, and after photo-thermal therapy.