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Magnetic iron oxide nanoclusters, which refers to a group of individual nanoparticles, have recently attracted much attention because of their distinctive behaviors compared to individual nanoparticles. In this review, we discuss preparation methods for creating iron oxide nanoclusters, focusing on synthetic procedures, formation mechanisms, and the quality of the products. Then, we discuss the emerging applications for iron oxide nanoclusters in various fields, covering traditional and novel applications in magnetic separation, bioimaging, drug delivery, and magnetically responsive photonic crystals.