Magnetic resonance imaging (MRI) is one of the most widely used diagnostic tools in the clinic. In this setting, real-time monitoring of therapy and tumor site would give the clinicians a handle to observe therapeutic response and to quantify drug amount to optimize the treatment. In this work, we developed a liposome-based cargo (cancer drugs) delivery strategy that could simultaneously monitor the real-time alternating magnetic field-induced cargo release from the change in MRI relaxation parameter R and the location and condition of liposome from the change in R. The tumor site can then be monitored during the cargo release because liposomes would passively target the tumor site through the enhanced permeability and retention (EPR) effect. Physical insights from the experimental results and corresponding Monte Carlo spin dynamics simulations were also discussed. Superparamagnetic iron oxide (SPIO) nanoparticles, diethylenetriaminepentaacetic acid gadolinium(III) (Gd(III)-DTPA), and a model cancer drug (fluorescein) were co-loaded in PEGylated thermosensitive liposomes. The liposomes were characterized by transmission electron cryo-microscopy (cryoTEM), dynamic light scattering (DLS), and inductively coupled plasma optical emission spectrometry (ICP-OES). Alternating magnetic field (AMF) was used to create controlled mild hyperthermia (39-42°C) and facilitate controlled cargo (fluorescein) release from the thermosensitive liposomes. MRI relaxation parameters, R and R, were measured at room temperature. The temporal variation in R was used to obtain the temporal profile of cargo release. Due to their similar sizes, both the gadolinium and cargo (model cancer drug fluorescein) would come out of the liposomes together as a result of heating. The temporal variation in R was used to monitor SPIO nanoparticles to enhance the tumor contrast. Monte Carlo spin dynamics simulations were performed by solving the Bloch equations and modeling SPIO nanoparticles as magnetized impenetrable spheres. TEM images and DLS measurements showed the diameter of the liposome nanoparticle ~ 200 nm. AMF heating showed effective release of the model drug. It was found that R increased linearly by about 70% and then saturated as the cargo release process was completed, while R remained approximately constant with an initial 7%-drop and then recovered. The linear increase in R is consistent with the expected linear cargo release with time upon AMF heating. Monte Carlo spin dynamics simulations suggest that the initial temporal fluctuation of R is due to the plausible changes of SPIO aggregation and the slow non-recoverable degradation of liposomal membrane that increases water permeability with time by the heating process. The simulations show an order of magnitude increase in R at higher water permeability. We have performed MR parameter study of the release of a cargo (model cancer drug, fluorescein) by magnetic heating from thermosensitive multifunctional liposomes loaded with dual contrast agents. The size of the liposome nanoparticles loaded with model cancer drug (fluorescein), gadolinium chelate, and SPIO nanoparticles was appropriate for a variety of cancer therapies. A careful and detailed analysis with theoretical explanation and simulation was carried out to investigate the correlation between MRI relaxation parameters, R and R, and different cargo release fractions. We have quantified the cargo release using R, which shows a linear relation between each other. This result provides a strong basis for the dosage control of drug delivered. On the other hand, the fairly stable R with almost constant value suggests that it could be used to monitor the position and condition of the liposomal site, as SPIO nanoparticles mostly remained in the aqueous core of the liposome. Because our synthesized SPIO-encapsulated liposomes could be targeted to tumor site passively by the EPR effect, or actively through magnetofection, this study provides a solid ground for developing MR cancer theranostics in combination of this nanostructure and AMF heating strategy. Furthermore, our simulation results predict a sharp increase in R during the AMF heating, which opens up the exciting possibility of high-resolution, high-contrast real-time imaging of the liposomal site during the drug release process, provided AMF heating could be incorporated into an MRI setup. Our use of the clinically approved materials, along with confirmation by theoretical simulations, make this technique a promising candidate for translational MR cancer theranostics.