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Magnetic iron oxide nanoparticles (MIONPs) have turned into a big research hotspot in biomedical fields mostly due to their large surface area to volume ratio and inherent superparamagnetism property. Various physical and chemical methods have been developed for their synthesis such as coprecipitation, solvothermal reduction, thermal decomposition, electrochemical synthesis, etc. Although most of these methods suffer from operational hurdles as well as environmental hazards. Therefore research focus is now concentrating towards their synthesis from various biological or green resources like plant extracts, micro-organisms, algae, glucose, starch, clays, etc. Plant extracts are mostly acceptable for such type of green synthesis due to their ability to reduce iron ions rapidly as well as their easy availability in wide varieties. Magnetic iron oxide nanoparticles have been applied in various biomedical fields such as targeted localization, magnetic hyperthermia, magnetic resonance imaging, and nuclear magnetic resonance imaging, Bio-separation and sensing method, cancer detection/diagnosis, and many more applications. This review comprehensively depicts the methods and challenges in the preparation of magnetic iron oxide nanoparticles as well as their potential application in biomedical fields. [ABSTRACT FROM AUTHOR]