In this paper, a simple synthesis method of small-size (about 50 nm in diameter), high magnetic and fluorescent bi-functional silica composite nanoparticles were developed, in which water-soluble Fe3O4 magnetic nanoparticles (MNs) and CdTe quantum dots (QDs) were directly incorporated into a silica shell by reverse microemulsion method. The high luminescent QDs can be used as luminescent marker, while the high magnetic MNs allow the manipulation of the bi-functional silica composite nanoparticles by external magnetic field. Poly (dimethyldiallyl ammonium chloride) was used to balance the electrostatic repulsion between CdTe QDs and silica intermediates to enhance the fluorescence intensity of MNs-QDs/SiO2 composite nanoparticles. The optical property, magnetic property, size characterization of the bi-functional composite nanoparticles were studied by UV-Vis and PL emission spectra, VSM, TEM, SEM. The stabilities toward time, pH and ionic strength and the effect of MNs on the fluorescence properties of bi-functional silica composite nanoparticles were also studied in detail. By modifying the surface of MNs-QDs/SiO2 composite nanoparticles with amino and methylphosphonate groups, biologically functionalized and monodisperse MNs-QDs/SiO2 composite nanoparticles can be obtained. In this work, bi-functional composite nanoparticles were conjugated with FITC labeled goat anti-rabbit IgG, to generate novel fluorescent-magnetic-biotargeting tri-functional composite nanoparticles, which can be used in a number of biomedical application.