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Gold nanoparticles and nanoclusters are widely researched due to their unique optical and electric properties and are size-limit being considered for bio-applications. These properties are predominantly distinctive in ultra-small thiol stabilized gold nanoclusters (Au NCs) and been significantly studied over the past decades. The proposed magnetic property make Au NCs a more promising candidate for bio-imaging and therapy including drug delivery and thermotherapy. However, its intrinsic magnetic property was poorly investigated. This project focuses on the investigation of biocompatible Au NCs with magnetic property. By using as a capping agent, a bidentate ligand made of thioctic acid anchoring groups appended with a poly (ethylene glycol) short chain (TA-PEG), water-soluble gold nanoclusters with diameter of 1.7 ± 0.4 nm have been produced in a single-step aqueous reduction of gold precursors. A functionalized folic acid (FA) conjugated ligand (FA-PEG-TA) has been obtained and used to synthesize Au NCs with diameter of 1.6 ± 0.3 nm. Both targeting and non-targeting Au NCs solutions demonstrated good long-term colloidal stability, high thermal-stability (at T = 40 ºC, 50 ºC) and are stabilized over a wide range of pH values pH 3-11 for non-targeting and pH 7-11 for folate derivatives. They were also found be paramagnetic by analyzing relaxation time T1 of adjacent capping ligands attached to the Au NCs surface. Both Au NCs were found to have low toxicity for MCF-7, a breast cancer cell line and HCT-116, a human colon cancer cell line in cell viability assays. In addition, FA-Au NCs showed a greater uptake by folate receptor (FR) -positive MDA-MB-231(human breast cancer cells) than PEG-Au NCs by three repeated experiments with results analyzed by Inductively coupled plasma mass spectrometry (ICP-MS). These findings demonstrated that the synthesized paramagnetic water-soluble Au NCs are promising biocompatible candidate for cancer treatment.