Magnetic-luminescent nanocomposites have obtained a great deal of attention due to their potential applications in magnetic separation of cells, magnetic resonance imaging and luminescence imaging, and so on. Herein, a new and facile two-step synthetic strategy was developed to prepare magnetic Fe3O4 modified single crystalline up-conversion luminescent NaYF4: Yb3+, Er3+ nanocrystals using Fe3O4 nanoparticles as the seeds. Acting as the "nuclei" in the reaction, the presence of Fe3O4 nanoparticles facilitates the formation of up-conversion NaYF4: Yb3+, Er3+ nanocrystals on their surfaces through heterogeneous nucleation process. The structure and properties of these multifunctional nanocrystals were characterized by transmission electron microscope (TEM), X-ray photoelectron spectroscopy (XPS), photo luminescence (PL) and X-ray diffraction (XRD). The results revealed that the as-prepared multifunctional nanocrystals show dual distinct properties of up-conversion fluorescent and superparamagnetism, which were cubic in shape and very uniform in size with an average size ranging 30–40 nm. These unique functionalities could be very attractive for biological systems, and some biological applications such as cell-labelling were also demonstrated.