Sensitive and quantitative measurements of clinically relevant protein biomarkers, pathogens and cells in biological samples would be invaluable for disease diagnosis, monitoring of malignancy, and for evaluating therapy efficacy. Biosensing strategies using magnetic nanoparticles (MNPs) have recently received considerable attention, since they offer unique advantages over traditional detection methods. Specifically, because biological samples have negligible magnetic background, MNPs can be used to obtain highly sensitive measurements in minimally processed samples. This review focuses on the use of MNPs for in vitro detection of cellular biomarkers based on nuclear magnetic resonance (NMR) effects. This detection platform, termed diagnostic magnetic resonance (DMR), exploits MNPs as proximity sensors to modulate the spin-spin relaxation time of water molecules surrounding the molecularly-targeted nanoparticles. With new developments such as more effective MNP biosensors, advanced conjugational strategies, and highly sensitive miniaturized NMR systems, the DMR detection capabilities have been considerably improved. These developments have also enabled parallel and rapid measurements from small sample volumes and on a wide range of targets, including whole cells, proteins, DNA/mRNA, metabolites, drugs, viruses and bacteria. The DMR platform thus makes a robust and easy-to-use sensor system with broad applications in biomedicine, as well as clinical utility in point-of-care settings.