To address efficacy issues of cancer diagnosis and chemotherapy, we have developed a magnetic nanoparticle (MNP) formulation with combined drug delivery and imaging properties that can potentially be used in image-guided drug therapy. Our MNP consists of an iron-oxide magnetic core coated with oleic acid (OA) and stabilized with an amphiphilic block copolymer. Previously, we reported that our MNP formulation can provide prolonged contrast for tumor magnetic resonance imaging and can be loaded with hydrophobic anticancer agents for sustained drug delivery. In this study, we developed MNPs with optical imaging properties using new near-infrared dyes to quantitatively determine their long-term biodistribution and tumor localization with and without an external magnetic field in mice with xenograft breast tumors. MNPs localized slowly in the tumor, reaching a peak 48 h post injection before slowly declining over the next 11 days. One-hour exposure of the tumor to a magnetic field further enhanced MNP localization to tumors. Our MNPs can be developed with combined drug delivery and multimodal imaging properties to improve cancer diagnosis, provide sustained treatment, and monitor therapeutic effects in tumors over time.