This review describes recent advances in the handling and manipulation of magnetic particles in microfluidic systems. Starting from the properties of magnetic nanoparticles and microparticles, their use in magnetic separation, immuno-assays, magnetic resonance imaging, drug delivery, and hyperthermia is discussed. We then focus on new developments in magnetic manipulation, separation, transport, and detection of magnetic microparticles and nanoparticles in microfluidic systems, pointing out the advantages and prospects of these concepts for future analysis applications.