Multifunctional core-shell microspheres consisting of a polystyrene 640 nm diameter core covered with a selectable number of layers of magnetite (12 nm) and silica-coated gold (15 nm) nanoparticles have been fabricated using the layer-by-layer (LbL) technique in aqueous solution. By varying the shell thickness and layer composition the magnetic and optical properties and the diameter of the colloids can be controlled independently. Optical spectra of the core-shell colloidal microspheres show a well-resolved Au surface plasmon peak in the visible which red-shifts with the number of adsorbed Au nanoparticle layers. The magnetic moment per sphere increases nearly linearly with the number of adsorbed magnetite nanoparticle layers, and the spheres can be assembled into chains of up to 1 mm length by deposition in a magnetic field.