Bionanocomposites fabricated using metal nanoparticles serve a wide range of biomedical applications viz., site targeted drug delivery, imaging etc. Theranostics emerge as an important field of science, which focuses on the use of single entity for both disease diagnosis and treatment. The present work aimed at designing a multifunctional nanocomposite comprising of iron/gold hybrid nanoparticles, coated with oleyl chitosan and conjugated with methotrexate. The HR-TEM images revealed the spherical nature of the composite, while it's nontoxic and biocompatible property was proved by the MTT assay in NIH 3T3 cells and hemolysis assay. Though the VSM results exhibited the magnetic property, the MRI phantom images and X-ray contrast images demonstrated the potential of the composite to be used as contrast agent. Thus the prepared nanocomposite possess good cytocompatibility, magnetic property and also high X-ray attenuation, wherein it could serve as a novel platform for both MRI and CT diagnosis, as well as drug conjugation could aid in targeted drug delivery.