A novel magnetic nanocarrier, cyclodextrin (CD)-citrate-gum arabic modified magnetic nanoparticles (GAMNPs), for hydrophobic drug delivery was fabricated by grafting the citrate-modified CD onto the GAMNPs via carbodiimide activation. The analyses of the transmission electron microscopy and the dynamic light scattering revealed that the product had a mean diameter of 14.6 nm and a mean hydrodynamic diameter of 26.2 nm. The CD grafting was confirmed by Fourier transform infrared spectroscopy, and the amount of CD grafted on the GAMNPs was determined to be 28.7 mg/g by the thermogravimetric analysis. The feasibility of using CD-citrate-GAMNPs as a carrier for hydrophobic drug delivery was demonstrated by investigating the formation of the inclusion complex and the in vitro release profile using ketoprofen as a model hydrophobic drug. It was found that CD-citrate-GAMNPs exhibited a considerable adsorption capability for ketoprofen as compared to GAMNPs. The complexation of CD-citrate-GAMNPs with ketoprofen was found to be exothermic and follow the Langmuir adsorption isotherm. Also, the presence of surfactant (sodium dodecyl sulfate, SDS) led to a decrease in the inclusion of ketoprofen because the linear structure of SDS made it easier to enter the cavity of CD as compared with the less linear ketoprofen. The results of the ketoprofen inclusion and the release experiments indicate that this system seems to be a very promising vehicle for the administration of hydrophobic drugs.