A facile method of synthesizing 60 nm magnetic-fluorescent core-shell bifunctional nanocomposites with the ability to label cells is presented. Hydrophobic trioctylphosphine oxide (TOPO)-capped CdSe@ZnS quantum dots (QDs) were assembled on polyethyleneimine (PEI)-coated Fe₃O₄ nanoparticles (MNP). Polyethyleneimine was utilized for the realization of multifunction, including attaching 4 nm TOPO capped CdSe@ZnS quantum dots onto magnetite particles, altering the surface properties of quantum dots from hydrophobic to hydrophilic as well as preventing the formation of large aggregates. Results show that these water-soluble hybrid nanocomposites exhibit good colloidal stability and retain good magnetic and fluorescent properties. Because TOPO-capped QDs are assembled instead of their water-soluble equivalents, the nanocomposites are still highly luminescent with no shift in the PL peak position and present long-term fluorescence stability. Moreover, TAT peptide (GRKKRRQRRRPQ) functionalized hybrid nanoparticles were also studied due to their combined magnetic enrichment and optical detection for cell separation and rapid cell labelling. A cell viability assay revealed good biocompatibility of these hybrid nanoparticles. The potential application of the new magnetic-fluorescent nanocomposites in biological and medicine is demonstrated.