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Iron oxide nanoparticles (IONPs) have played a pivotal role in the development of nanomedicine owing to their versatile functions at the nanoscale, which facilitates targeted delivery, high contrast imaging, and on-demand therapy. Some biomedical inadequacies of IONPs on their own, such as the poor resolution of IONP-based Magnetic Resonance Imaging (MRI), can be overcome by co-incorporating optical probes onto them, which can be either molecule- or nanoparticulate-based. Optical probe incorporated IONPs, together with two prominent non-ionizing radiation sources (i.e., magnetic field and light), enable a myriad of biomedical applications from early detection to targeted treatment of various diseases. In this context, many research articles are in the public domain on magneto-optical nanoparticles; discussed in detail are fabrication strategies for their application in the biomedical field; however, lacking is a comprehensive review on real-life applications in vivo, their toxicity, and the prospect of bench-to-bedside clinical studies. Therefore, in this review, we focused on selecting such important nanocomposites where IONPs become the magnetic component, conjugated with various types of optical probes; we clearly classified them into class 1 to class 6 categories and present only in vivo studies. In addition, we briefly discuss the potential toxicity of such nanocomposites and their respective challenges for clinical translations. [ABSTRACT FROM AUTHOR]