A facile polyol approach for preparing low-Curie-temperature (TC) gadolinium-doped iron oxide nanoparticles (GdIO NPs) for targeted magnetic hyperthermia and chemotherapy coupled with T1–T2 dual-model magnetic resonance (MR) imaging (where T1 and T2 are the longitudinal and transverse relaxation times, respectively) is reported. A small amount of Gd doping decreases the TC of iron oxide down to about 400 K. In the presence of ethanolamine, controlled polyol synthesis leads to the formation of low-TC, highly magnetic (52.87 emu g–1), and size-controlled (ca. 10 nm) GdIO NPs. A further conjugation with folate and a chemotherapeutic drug has been developed, and the whole system is used for in vitro magneto-chemotherapy (magnetic hyperthermia and chemotherapy) for cancer treatment. The synthesized GdIO NPs are stable colloids that are hemocompatible and cytocompatible over a wide concentration range and have a high affinity towards cancer cells. The release of a chemotherapeutic drug from the GdIO NPs significantly affects cancer cell viability, and the T1–T2 dual-model magnetic resonance enhances bioimaging in a breast cancer cell model. We suggest that the chemotherapeutic-drug-conjugated GdIO NPs have great potential for cell targeting and magnetic resonance imaging in cancer magneto-chemotherapy.