Owing to recent advancements in nanotechnology, magnetic iron oxide nanoparticles (MNPs), particularly magnetite (FeO) and maghemite (γ-FeO), are currently widely employed in the field of medicine. These MNPs, characterized by their large specific surface area, potential for diverse functionalization, and magnetic properties, have found application in various medical domains, including tumor imaging (MRI), radiolabelling, internal radiotherapy, hyperthermia, gene therapy, drug delivery, and theranostics. However, ensuring the non-toxicity of MNPs when employed in medical practices is paramount. Thus, ongoing research endeavors are essential to comprehensively understand and address potential toxicological implications associated with their usage. This review aims to present the latest research and findings on assessing the potential toxicity of magnetic nanoparticles. It meticulously delineates the primary mechanisms of MNP toxicity at the cellular level, encompassing oxidative stress, genotoxic effects, disruption of the cytoskeleton, cell membrane perturbation, alterations in the cell cycle, dysregulation of gene expression, inflammatory response, disturbance in ion homeostasis, and interference with cell migration and mobility. Furthermore, the review expounds upon the potential impact of MNPs on various organs and systems, including the brain and nervous system, heart and circulatory system, liver, spleen, lymph nodes, skin, urinary, and reproductive systems.