A scalable synthesis of magnetic core–shell nanocomposite particles, acting as a novel class of magnetic resonance (MR) contrast agents, has been developed. Each nanocomposite particle consists of a biocompatible chitosan shell and a poly(methyl methacrylate) (PMMA) core where multiple aggregated γ‐Fe2O3 nanoparticles are confined within the hydrophobic core. Properties of the nanocomposite particles including their chemical structure, particle size, size distribution, and morphology, as well as crystallinity of the magnetic nanoparticles and magnetic properties were systematically characterized. Their potential application as an MR contrast agent has been evaluated. Results show that the nanocomposite particles have good stability in biological media and very low cytotoxicity in both L929 mouse fibroblasts (normal cells) and HeLa cells (cervical cancer cells). They also exhibited excellent MR imaging performance with a T2 relaxivity of up to 364 mMFe−1 s−1. An in vivo MR test performed on a naked mouse bearing breast tumor indicates that the nanocomposite particles can localize in both normal liver and tumor tissues. These results suggest that the magnetic core–shell nanocomposite particles are an efficient, inexpensive and safe T2‐weighted MR contrast agent for both liver and tumor MR imaging in cancer therapy.