To prepare functionalized magnetic polymer particles that are thermally responsive, inverse emulsion copolymerization of N-isopropylacrylamide, N,N′-methylenebisacrylamide and glycidyl acrylate (GA) was investigated in paraffin oil in the presence of γ-Fe2O3 nanoparticles dispersed in a water/glycerol mixture. The resulting polymer particles were characterized regarding the morphology, size, polydispersity, iron content, and the temperature-dependent phase transition using optical microscopy, transmission electron microscopy, scanning electron microscopy, atomic absorption spectroscopy, and differential scanning calorimetry. Magnetic properties were examined using hysteresis loop measurements and by analyzing the magnetic susceptibility with respect to temperature. We have also investigated the influence of the concentration of γ-Fe2O3 and GA in monomers on properties of the particles (morphology, size, and presence of oxirane groups). The particles possessed a hollow structure as a result of phase separation between water/glycerol hydrophilic solvents in the polymerization feed and the forming polymer. Depending on the concentration of γ-Fe2O3 in the monomer phase, the magnetic hollow particles contained 5–24 wt% iron. In water, the particles gradually collapsed when the temperature was raised to 40 °C because the elevated temperature weakened hydration and the PNIPAAm chains gradually became more hydrophobic.