Abstract: Described herein is a method of making modified paramagnetic nanoparticles with improved therapeutic loading efficiency and enhanced circulation properties. The method comprises coating a paramagnetic nanoparticle (PMNP) with a hydrophobic coating comprising lipophilic drug and a polymer. Also described herein is a PMNP, and a composition comprising PMNP. In certain embodiment, the PMNP have improved permeability through the blood brain barrier. Also described herein is a method of using the PMNP for the treatment of diseases. In certain embodiments, the method of treatment is a combination therapy. Described herein are imaging of therapeutic delivery of PMNP and diagnostic methods using the PMNP. Also described herein is a diagnostic kit that comprises the PMNP.