A nano-carbon and iron composite--carbon coated iron nanoparticles produced by carbon arc method can be used as a new kind of magnetic targeting and heating drug carrier for cancer therapy. It presents an special nanostructure of iron nanoparticles in inner core and nano-carbon shells outside. The nano-carbon shells have a high drug adsorption ability because of its high surface area and its inner core has great effect of targeting magnetic heating. Magnetic induction heating effect of pig liver injected mixed liquids with different concentration carbon coated iron particles in physiological saline indicates that the more quantity of nanoparticles used, the higher temperature it is. Magnetic induction heating effect of the pig liver was compared in the case of filling method and injection method (both were containing 0.3g carbon coated iron nanoparticles). The iron nanoparticle in its inner core has good effect of magnetic induction heating, the temperature can go up to 51 °C in the case that carbon coated iron nanoparticles mixed with physiological saline were distributed uniformly in pig liver. And the temperature can go up to 46°C in the case that carbon-coated iron nanoparticles was injected in a certain section of pig liver. It is obvious that injected one is much better than that of filled, but they are all enough to kill the cancer cells.