Magnetic iron oxide nanoparticles (MIONPs) are particularly attractive in biosensor, antibacterial activity, targeted drug delivery, cell separation, magnetic resonance imaging tumor magnetic hyperthermia, and so on because of their particular properties including superparamagnetic behavior, low toxicity, biocompatibility, etc. Although many methods had been developed to produce MIONPs, some challenges such as severe agglomeration, serious oxidation, and irregular size are still faced in the synthesis of MIONPs. Thus, various strategies had been developed for the surface modification of MIONPs to improve the characteristics of them and obtain multifunctional MIONPs, which will widen the applicational scopes of them. Therefore, the processes, mechanisms, advances, advantages, and disadvantages of six main approaches for the synthesis of MIONPs; surface modification of MIONPs with inorganic materials, organic molecules, and polymer molecules; applications of MIONPs or modified MIONPs; the technical challenges of synthesizing MIONPs; and their limitations in biomedical applications were described in this review to provide the theoretical and technological guidance for their future applications.