The incorporation of magnetic and upconversion luminescent properties into one single nanostructure is highly desirable in nanomedicine for contrast agents and/or nanotheranostic platforms. Current magnetic upconversion luminescent nanocomposites generally suffer from relatively large size and/or low magnetization, which might induce unsatisfactory colloidal stability, reticuloendothelial system clearance, and limit their applications in biolabeling, sensing, imaging, bioseparation, magnetic targeting, and so on. Herein, we constructed multimagnetic-beads-embedded Fe3O4/NaYF4: Yb, Er nanocomposites to overcome these problems. Polyelectrolyte was introduced as an organic intermediate layer to offset the crystal lattice mismatch between Fe3O4 and NaYF4: Yb, Er. It also acted as the ligand to direct the growth of NaYF4: Yb, Er on the surface of Fe3O4. So-prepared nanocomposites exhibited an average size of 33.8 nm, much smaller than those with magnetic nanoparticle clusters as the core. The saturation magnetization of the nanocomposites is 17.8 emu/g, higher than those following current single magnetic nanoparticle embedded approach. To demonstrate their application potential in bioimaging and theranostics, magnetic field-assisted sensitive upconversion luminescence cell imaging is presented.