In recent years, the development of composite nanostructures containing noble metal and magnetic nanocrystals has attracted much interest because they offer a promising avenue for multifunctional applications in nanomedicine and pharmacotherapy. In this work, we present a facile two-step hydrothermal approach for the synthesis of bifunctional heterodimer nanoparticles (HDNPs) composed of hematite nanocubes (alpha-Fe2O3 NCs) and silver nanoparticles (Ag-NPs). The formation and magnetic property of alpha-Fe2O3-Ag HDNPs was analyzed by transmission electron microscopy, x-ray diffraction and vibrating sample magnetometer. Interestingly, the hydrothermal-synthesized alpha-Fe2O3-Ag HDNPs were found to display significant antibacterial activity against three types of infectious bacteria. The cytotoxicity of alpha-Fe2O3-Ag nanocomposite against lung cancer A549 cell line was investigated and compared with that of pure alpha-Fe2O3 NCs and Ag-NPs. The obtained results reveal that the alpha-Fe2O3-Ag nanocomposite exhibited higher anticancer performance than that of pure Ag-NPs, whereas pure alpha-Fe2O3 NCs were not cytotoxic to the tested cells. The inhibitory concentration (IC50) of the alpha-Fe2O3-Ag nanocomposite was found at 20.94 mu g/mL. With the aforementioned properties, alpha-Fe2O3-Ag HDNPs showed a high potential as a multifunctional material for advanced biomedicine and nanotherapy applications.