In this paper, fluorescent and magnetic bi-functional NaLuF4:Ln (Ln = Gd3+, Yb3+, Tm3+) nanocrystals were synthesized via a simple hydrothermal method using oleic acid as capping ligand. The crystal phase, size, upconversion (UC) properties, and magnetization of the nanocrystals can be readily modified by doping with Gd3+. The results reveal that Gd3+ addition can promote the transformation from the cubic to the hexagonal phase and reduce the size. In addition, NaLuF4:Ln (Ln = Gd3+, Yb3+, Tm3+) nanocrystals present efficient near infrared (NIR) to NIR emission, which is beneficial for in vivo biomedical applications due to the increased penetration depth and low radiation damage of NIR light in bio-tissues. More importantly, owing to the large magnetic moment of Gd3+, the Gd3+-doped NaLuF4 nanocrystals also present excellent paramagnetic properties at room temperature. Therefore, it is expected that these nanocrystals can be used as promising dual-modal nanoprobes for optical bioimaging and magnetic resonance imaging (MRI), and may have potential applications in bioseparation.