Surface-functionalized Mg_1−xCo_xFe₂O₄ (0 ≤ x ≤ 1; Δx = 0.1) can be an exciting candidate as an MRI contrast agent and for thermotherapeutic applications. The figure-of-merit, T₂, relaxivity, r₂, of MRI and specific loss power, SLP, of hyperthermia depend on the structural and magnetic properties of the nanoparticles. We synthesized cobalt-substituted magnesium ferrite Mg_1−xCo_xFe₂O₄ (0 ≤ x ≤ 1 with Δx = 0.1) nanoparticles using a chemical co-precipitation method. The lattice parameter and average crystallite size increase with the increase in cobalt content. The force-constant of FTIR of the tetrahedral sites increases, and that of the octahedral sites decreases with an increase in cobalt content. The room temperature Mössbauer spectra of Mg_1−xCo_xFe₂O₄ show that the Mössbauer absorption area of the A site decreases, and the Mössbauer absorption area of the B site increases with x. The Mössbauer spectra and M–H hysteresis loops at room temperature confirmed that a transition from fast relaxation (superparamagnetic) to mixed slow/fast (superparamagnetic/ferrimagnetic) relaxation occurs with changing cobalt content. The cobalt ion tends to occupy the octahedral B site, which makes the A–B interaction stronger; therefore, we see the above transition. Cytotoxicity experiments on HeLa cells revealed that both chitosan and chitosan-coated magnesium cobalt ferrite nanoparticles are biocompatible. In the Mg_1−xCo_xFe₂O₄ series, both r₂ and SLP increase with x because of the increase in magnetization and anisotropy.