A technique is described for specific, sensitive, quantitative, and rapid detection of biological targets by using superparamagnetic nanoparticles and a "microscope" based on a high-transition temperature dc superconducting quantum interference device (SQUID). In this technique, a mylar film to which the targets have been bound is placed on the microscope. The film, at room temperature and atmospheric pressure, is typically 40 micrometer from the SQUID, which is at 77 K in a vacuum. A suspension of magnetic nanoparticles carrying antibodies directed against the target is added to the mixture in the well, and 1-s pulses of magnetic field are applied parallel to the SQUID. In the presence of this aligning field the nanoparticles develop a net magnetization, which relaxes when the field is turned off. Unbound nanoparticles relax rapidly by Brownian rotation and contribute no measurable signal. Nanoparticles that are bound to the target on the film are immobilized and undergo Néel relaxation, producing a slowly decaying magnetic flux, which is detected by the SQUID. The ability to distinguish between bound and unbound labels allows one to run homogeneous assays, which do not require separation and removal of unbound magnetic particles. The technique has been demonstrated with a model system of liposomes carrying the FLAG epitope. The SQUID microscope requires no more than (5 +/- 2) x 10(4) magnetic nanoparticles to register a reproducible signal.