Magnetic nanoparticles have attracted increasingly attention due to their potential applications in many industrial fields, even extending their use in biomedical applications like in drug delivery system, Implants, biosensors, lab on chip, image enhancement, Hyperthermic therapy and so on .For better experimental applications magnetic nanoparticles are encapsulated. The coating material used in this study is pullulan. Pullulan is a nontoxic, non-immunogenic, plasma expanders which is coated with the magnetic nanoparticles. Acetylation of pullulan is carried out using Motozato's method and along with this magnetic gel was prepared. Pullulan acetate coated magnetic nanoparticles was the outcome of pullulan acetate and magnetic nanoparticles by solvent diffusion method. The sample was characterized using XRD (X-ray Diffraction), FTIR (Fourier Transform Infrared Spectroscopy), SEM (Scanning Electron Microscopy), VSM (Vibrating Sample Magnetometry) and DLS (Dynamic Light Scattering).Biocompatibility studies shows percentage of cell viability with different concentration of samples. Material was checked for increase in temperature by varying magnetic field and field intensity.