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Monodisperse magnetic nanoparticles (NPs) could enable the ultra-sensitive magnetic detection of biological analytes. However, rendering these particles biocompatible has remained a challenge. We report the bio-functionalization and detection of 12-nm manganese ferrite NPs. We have achieved the site-specific binding of biotin-functionalized NPs onto avidin-patterned silicon oxide substrates and DNA-functionalized NPs onto complementary DNA-patterned silicon oxide substrates. Utilizing scanning SQUID microscopy, we show that these substrate-bound NPs retain their magnetic properties. Finally, we demonstrate a novel method of detecting either protein binding or DNA hybridization at room temperature using the NPs and a magnetic tunnel-junction-based biosensor situated in orthogonal magnetic fields.