The aim of this study was to develop a novel multifunctional nanoparticle, which encapsulates SPION and Gemcitabine in PLGA +/- PEG to form multifunctional drug delivery system. For this aim, super paramagnetic iron oxide nanoparticles (SPIONs) were simultaneously synthesized and encapsulated with Gemcitabine (Gem) in PLGA +/- PEG copolymers via W/O/W double emulsification method. Optimum size and encapsulation efficiency for radiosensitization, hyperthermia and diagnostic applications were considered and the preparation parameters systematically were investigated and physicochemical characteristics of optimized nanoparticle were studied. Then SPION-PLGA and PLGA-Gem nanoparticles were prepared with the same optimized parameters and the toxicity of these nanoparticles was compared with Gemcitabine in human breast cancer cell line (MCF-7). The optimum preparation parameters were obtained with Gem/polymer equal to 0.04, SPION/polymer equal to 0.8 and 1% sucrose per 20 mg of polymer. The hydrodynamic diameters of all nanoparticles were under 200 nm. Encapsulation efficiency was adjusted between 13.2% to 16.1% for Gemcitabine and 48.2% to 50.1% for SPION. In-vitro Gemcitabine release kinetics had controlled behavior. Enhancement ratios for PLGA-Gem and SPION-PLGA-Gem at concentration of nanoparticles equal to IC50 of Gemcitabine were 1.53 and 1.89 respectively. The statistical difference was significant (p-value = 0.006 for SPION-PLGA-Gem and p-value = 0.015 for PLGA-Gem compared with Gemcitabine). In conclusion, we have successfully developed a Gemcitabine loaded super paramagnetic PLGA-Iron Oxide multifunctional drag delivery system. Future work includes in-vitro and in-vivo investigation of radiosensitization and other application of these nanoparticles.