Isolation of cancer cells, bacteria, and viruses from peripheral blood has important applications in cancer diagnosis, therapy monitoring, and drug development. Magnetic particles functionalized with antibodies that target receptors of cancer cells have been shown to isolate such entities using magnetic field gradients. Here, we report enhancement in capture efficiency and specificity by engineering magnetic nanoparticles and integrating them with microfluidics for the enumeration of tumor cells. Nanoparticles were made from iron oxide, coated with poly(ethylene glycol), and conjugated through avidin-biotin chemistry with antibody specifically against epithelial cell adhesion molecule (EpCAM). On exposure of targeted nanoparticles to tumor cells, specific uptake by EpCAM-expressing tumor cells (e.g., BxPC3, a pancreatic cancer cell) was observed, whereas there was negligible uptake by cells with low EpCAM expression (e.g., CCRF-CEM, a leukemia cell). Using an arrangement of magnets called a Halbach array, capture efficiency and specificity towards BxPC3 cells tagged with magnetic nanoparticles were enhanced, compared to conditions without the magnetic field gradient and/or without magnetic nanoparticles, either in buffer or in whole blood. These results illustrate that engineered magnetic nanoparticles and their integration with microfluidics have great potential for tumor cell enumeration and cancer prognosis.