Magnetic particle imaging (MPI) has recently emerged as a promising non-invasive imaging technique because of its signal linearly propotional to the tracer mass, ability to generate positive contrast, low tissue background, unlimited tissue penetration depth, and lack of ionizing radiation. The sensitivity and resolution of MPI are highly dependent on the properties of magnetic nanoparticles (MNPs), and extensive research efforts have been focused on the design and synthesis of tracers. This review examines parameters that dictate the performance of MNPs, including size, shape, composition, surface property, crystallinity, the surrounding environment, and aggregation state to provide guidance for engineering MPI tracers with better performance. Finally, we discuss applications of MPI imaging and its challenges and perspectives in clinical translation.