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Drug delivery systems mediated by nanoparticles (NPs) have immense therapeutic applications mainly in the area of cancer therapy. The efficacy of chemotherapeutics can be effectual when combined with thermal therapy such as hyperthermia, or with radiation therapy. For thermal-chemotherapy, suitably functionalized magnetic NPs with preferred magnetic parameters are crucial. In this work, we prepared PEG-dicarboxylic acid (PEGD) coated highly aqueous dispersible mesoporous magnetic nanoclusters (MNCs) by a simple solvothermal method with superior magnetic properties. The nanoclusters were well distributed and visualized in the assembly of smaller NPs, formed in the size range of 130–350 nm. MNCs were formed in an inverse spinel structure with an average crystallite size of 15.9 nm and had a mesoporous nature with a high specific surface area of ∼111 m2 g−1. MNCs are biocompatible and effective for hyperthermia. The dispersion of MNCs either in water or DMEM or PBS solvent at various concentrations exhibited a superior rise in temperature when exposed to an applied alternating magnetic field for hyperthermia. Further, the PEGylated MNCs when modified by amine functionalization and conjugated with doxorubicin (DOX) possessed a drug-encapsulation efficiency of ∼92%. The cytotoxicity assessment of DOX loaded MNCs towards breast cancer (MCF-7) cells showed nearly 60% apoptosis when incubated at a concentration of 1000 μg mL−1 for 24 h. [ABSTRACT FROM AUTHOR]