As a bi-functional cancer treatment agent, a new hybrid nanostructure is presented which can be used for photothermal therapy by exposure to one order of magnitude lower laser powers compared to similar nanostructures in addition to substantial enhancment in magnetic resonance imaging (MRI) contrast. This gold-iron oxide hybrid nanostructure (GIHN) is synthesized by a cost-effective and high yield water-based approach. The GIHN is sheilded by PEG. Therefore, it shows high hemo and biocompatibility and more than six month stability. Alongside earlier nanostructures, the heat generation rate of GIHN is compareable with surfactnat-capped gold nanorods (GNRs). Two reasons are behind this enhancement: Firstly the distance between GNRs and SPIONs is adjusted in a way that the surface plasmon resonance of the new nanostructure is similar to bare GNRs and secondly the fraction of GNRs is raised in the hybrid nanostructure. GIHN is then applied as a photothermal agent using laser irradiation with power as low as 0.5 W.cm(-2) and only 32% of human breast adenocarcinoma cells could survive. The GIHN also acts as a dose-dependent transvers relaxation time (T2) MRI contrast agent. The results show that the GINH can be considered as a good candidate for multimodal photothermal therapy and MRI.