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Magnetic hyperthermia, in which magnetic nanoparticles (MNPs) generate heat under an alternating magnetic field, has emerged as a promising strategy for cancer therapy. Among numerous magnetic hyperthermia platforms, direct intratumoral administration has achieved the greatest clinical progress because it enables localized heat generation while overcoming the limited tumor accumulation associated with systemic nanoparticle delivery. The development of functional MNPs capable of efficient cellular interaction and intracellular localization has further expanded magnetic hyperthermia beyond conventional tissue heating toward intracellular hyperthermia and cancer immunotherapy. This review summarizes the historical evolution and clinical translation of functional MNPs with particular emphasis on the design principles that have facilitated successful clinical development. We discuss how advances in nanoparticle engineering have improved intratumoral retention, intracellular delivery, thermal dose optimization, and therapeutic efficacy. We further review the emerging role of magnetic hyperthermia as an in situ vaccination strategy capable of inducing immunogenic cell death and stimulating systemic antitumor immunity, providing a biological rationale for combination with immunotherapies. Finally, we discuss current challenges limiting widespread clinical translation, together with future perspectives on multifunctional therapeutic and theranostic nanoplatforms. These advances position functional MNPs as promising platforms for next-generation cancer therapy.