Multifunctional magnetic microcapsules (MMCs) for the combined cancer cells hyperthermia and chemotherapy in addition to MR imaging are successfully developed. A classical layer-by-layer technique of oppositely charged polyelectrolytes (poly(allylamine hydrochloride) (PAH) and poly(4-styrene sulfonate sodium) (PSS)) is used as it affords great controllability over the preparation together with enhanced loading of the chemotherapeutic drug (doxorubicin, DOX) in the microcapsules. Superparamagnetic iron oxide (SPIOs) nanoparticles are layered in the system to afford MMC1 (one SPIOs layer) and MMC2 (two SPIOs layers). Most interestingly, MMC1 and MMC2 show efficient hyperthermia cell death and controlled DOX release although their magnetic saturation value falls below 2.5 emu g−1, which is lower than the 7–22 emu g−1 reported to be the minimum value needed for biomedical applications. Moreover, MMCs are pH responsive where a pH 5.5 (often reported for cancer cells) combined with hyperthermia increases DOX release predictably. Both systems prove viable when used as T2 contrast agents for MR imaging in HeLa cells with high biocompatibility. Thus, MMCs hold a great promise to be used commercially as a theranostic platform as they are controllably prepared, reproducibly enhanced, and serve as drug delivery, hyperthermia, and MRI contrast agents at the same time.