In clinical practice, to treat diseases such as osteosarcoma or chondrosarcoma with broad surgical ostectomy, it would be ideal to have scaffolds that not only fill up the bone void but also possess the ability to regulate the subsequent regimes for targeted chemotherapy and/or bone regeneration. Magnetic targeting of therapeutic agents to specific sites in the body provides certain advantages such as minimal side-effects of anti-cancer drugs. The objective of this study was to characterize novel magnetic scaffolds that can be used as a central station to regulate the drug delivery of a magnetic nanoparticle system. Different sizes and quantities of FeO particles were mixed with poly-ε-caprolactone (PCL) to construct the magnetic scaffolds, and their mechanical properties, degradation performance, and cell biocompatibility were evaluated. It appeared that the presence of FeO particles influenced the magnetic, mechanical, and biological performances of the scaffolds. The prepared bio-nanocomposite scaffolds provided predominantly magnetic/superparamagnetic properties. Scaffolds with a micron-sized FeO to PCL weight (wt) ratio of 0.1:0.9 exhibited higher mechanical performances among samples, with Young’s modulus reaching 1 MPa and stiffness,13 N/mm. Although an increased FeO particle proportion mildly influenced cell growth during the biocompatibility test, none of the FeO/PCL scaffolds showed a cytotoxic effect.