We described the development of functionalized magnetic nanoparticles (MNPs) with PEG-modification, a phospholipids micelle coating, and their use in manipulating histidine-tagged proteins. Highly monodisperse MNPs were synthesized in an organic solvent and could be phase-transferred into an aqueous solution by encapsulating the nanoparticles with a phospholipids micelle. The phospholipids micelle coating rendered the nanoparticles highly water-soluble, and the functional groups of the phospholipids coating allowed for the bioconjugation of various moieties, such as fluorescent molecules and engineered proteins. Functionalized phospholipids, such as nitrilotriacetic acid (NTA)-phospholipids, caused the MNPs to bind and allowed for manipulation of histidine-tagged proteins. Due to their high surface/volume ratio, the MNPs showed better performance (about 100 times higher) in immobilizing engineered proteins than conventional micrometer-sized beads. This demonstrates that MNPs coated with phospholipids micelle can be a versatile platform for the effective manipulation of various kinds of engineered proteins, which is very important in the field of proteomics. It is expected that a combination of MNPs with optical fluorescent molecules can find applications in bimodal (magnetic and optical) molecular imaging nanoprobes.