Super-paramagnetic iron oxide nanoparticles were synthesized by a co-precipitation method, which was further functionalized with chitosan (CS). The composite was investigated for binding with Nystatin (Nyst), a polyene polyhydroxy antifungal widely used in management of mucocutaneous fungal infections. The structure of the Fe3O4/CS/Nyst composite was characterized by different physicochemical techniques. Transmission electron microscope analysis revealed the Fe3O4/CS/Nyst composite with a mean diameter of ∼10–20 nm in a monodispersed spherical form. Fourier-transform infrared spectroscopy analysis confirmed the binding of CS on Fe3O4 NPs and also the loading of Nyst on the nanostructure. The UV–Vis absorption spectroscopy demonstrated the Nyst drug loading by 22% capacity. The antifungal activity of the Fe3O4/CS/Nyst was evaluated against Candida species and Aspergillus fumigatus, which demonstrated excellent activity with a minimum inhibitory concentration ranging from 2 to 16 μg/mL. The MTT assay was used to evaluate the toxicity of compounds which did not reveal any toxic effect on the adipose derived mesenchymal stem cells. Regarding remarkable antifungal activities and low toxicity of this magnetic nano-compound, it could be a good candidate for target therapy of mucocutaneous and local fungal infections.