Here, novel nanoprobes for combined optical and magnetic resonance (MR) bioimaging are reported. Fluoride (NaYF4) nanocrystals (20–30 nm size) co-doped with the rare earth ions Gd3+ and Er3+/Yb3+/Eu3+ are synthesized and dispersed in water. An efficient up- and downconverted photoluminescence from the rare-earth ions (Er3+ and Yb3+ or Eu3+) doped into fluoride nanomatrix allows optical imaging modality for the nanoprobes. Upconversion nanophosphors (UCNPs) show nearly quadratic dependence of the photoluminescence intensity on the excitation light power, confirming a two-photon induced process and allowing two-photon imaging with UCNPs with low power continuous wave laser diodes due to the sequential nature of the two-photon process. Furthermore, both UCNPs and downconversion nanophosphors (DCNPs) are modified with biorecognition biomolecules such as anti-claudin-4 and anti-mesothelin, and show in vitro targeted delivery to cancer cells using confocal microscopy. The possibility of using nanoprobes for optical imaging in vivo is also demonstrated. It is also shown that Gd3+ co-doped within the nanophosphors imparts strong T1 (Spin-lattice relaxation time) and T2 (spin-spin relaxation time) for high contrast MR imaging. Thus, nanoprobes based on fluoride nanophosphors doped with rare earth ions are shown to provide the dual modality of optical and magnetic resonance imaging.