We report a new type of multifunctional nanomaterials, FePt@Fe₂O₃ yolk-shell nanoparticles, which exhibit high cytotoxicity originated from the FePt yolks and strong MR contrast enhancement due to Fe₂O₃ shells. Encouraged by the recently observed ultrahigh cytotoxicity of FePt@CoS₂ yolk-shell nanoparticles (J. Am. Chem. Soc. 2007, 129, 1428), we used Fe₂O₃ to replace the CoS₂ shells to further investigate the applications of the yolk-shell nanostructures. Comparing with two commercial contrast agents Mion and Sinerem, FePt@Fe₂O₃ yolk-shell nanoparticle showed much stronger MR contrast enhancement according to their relixivity values (R2*) under same concentrations. The ultralow IC₅₀ value (420 ± 12 ng Pt/mL) of FePt@Fe₂O₃ yolk-shell nanoparticles likely due to the slow dissolution and release of FePt yolks increases the cytotoxicity. The dual-functional FePt@Fe₂O₃ yolk-shell nanoparticles may be explored as a potential MRI contrast agent and as a potent anticancer drug at the same time. The unique yolk-shell nanoparticles will lead to new designs of multifunctional nanostructures for nanomedicines.