Herein we report a theranostic system based on iron oxide-gadolinium nanoparticles coated by chitosan as a dual contrast agent for magnetic resonance imaging and controlled delivery application. Iron oxide nanoparticles were prepared by reduction of iron (III) chloride followed by surface modification using arenediazonium tosylate and diethylenetriaminepentaacetic acid for Gd(III) complexation. Nanoparticles were loaded with the anticancer drug doxorubicin and coated by low molecular weight chitosan to improve stability in solution and control the release of the drug. Dynamic light scattering, z-potential, thermogravimetric analysis, attenuated total refraction infrared spectroscopy and magnetic hysteresis curves reveal the success of surface modification and coating process. The amount of Gd(III) complexed and doxorubicin loaded were assessed by UV-Vis. Release studies were carried out in simulated physiological conditions. Results indicate that the obtained iron oxide-Gd(III) nanoparticles coated by chitosan are stable up to one month in physiological conditions and magnetic response is slightly decreased. The MRI analysis, doxorubicin high encapsulation efficiency and sustained release trend suggests that the presented system represents an interesting platform for the development of future theranostic agents.