Magnetic drug targeting, using core-shell magnetic carrier particles loaded with anti-cancer drugs, is an emerging and significant method of cancer treatment. Gold shell-iron core nanoparticles (Fe@Au) were synthesized by the reverse micelle method with aqueous reactants, surfactant, co-surfactant and oil phase. XRD, XPS, TEM and magnetic property measurements were utilized to characterize these core-shell nanoparticles. Magnetic measurements showed that the particles were superparamagnetic at room temperature and that the saturation magnetization decreased with increasing gold concentration. The anti-cancer drug doxorubicin (DOX) was loaded onto these Fe@Au nanoparticle carriers and the drug release profiles showed that upto 25% of adsorbed drug was released in 80 h. It was found that the amine (-NH2) group of DOX binds to the gold shell. An in vitro apparatus simulating the human circulatory system was used to determine the retention of these nanoparticle carriers when exposed to an external magnetic field. A high percentage of magnetic carriers could be retained for physiologically relevant flow speeds of fluid. The present findings show that DOX loaded gold coated iron nanoparticles are promising for magnetically targeted drug delivery.