A simple wet chemical route has been employed to synthesize multifunctional core-shell nanoparticles of Fe3O4@Y2O 3:Eu3+ showing an interesting combination of magnetic and luminescent properties having potential for medical applications. The core-shell nanoparticles were synthesized in a two-step process wherein first step, the Fe3O4 nanoparticles were synthesized and subsequently they are coated with Y2O3:Eu3+. XRD and magnetization curves were successfully used to retrieve the particle size of Fe3O4 nanoparticles. Particle size (∼10 nm) extracted from XRD and magnetization curves have been found to be consistent with the measured size from AFM and TEM. Further, the XRD analysis reveals formation of pure cubic phases of magnetite as well as of Y2O3:Eu 3+. It has been shown here that through simple chemistry it is possible to change the thickness of Y2O3:Eu3+ shell. From SEM and TEM studies, the size of core shell nanoparticles seen as ∼30 nm. In addition to bright red (612 nm) emission, these materials also show superparamagnetic behavior at room temperature. Emission intensity has been found to significantly increase with increase in annealing temperature. The synthesized materials have extensive for applications in the area of drug delivery and bio-imaging. © 2013 Elsevier B.V. All rights reserved.