Multifunctional KGdF4:18%Yb(3+),2%Er(3+) nanoparticles with upconversion fluorescence and paramagnetism are synthesized. The average sizes of the nanoparticles capped with branched polyethyleneimine (PEI) and 6-aminocaproic acid (6AA) are ~14 and ~13 nm, respectively. Our KGdF4 host does not exhibit any phase change with the decrease of particle size, which can prevent the detrimental significant decrease in upconversion luminescence caused by this effect observed in the well-known NaYF4 host. The branched PEI and 6AA capping ligands endow our nanoparticles with water-dispersibility and biocompatibility, which can favor internalization of our nanoparticles into the cytoplasm of HeLa cells and relatively high cell viability. The strong upconversion luminescence detected at the cytoplasm of HeLa cells incubated with the branched PEI-capped nanoparticles is probably attributed to the reported high efficiency of cellular uptake. The magnetic mass susceptibility of our nanoparticle is 8.62 × 10(-5) emu g(-1) Oe(-1). This is the highest value ever reported in trivalent rare-earth ion-doped KGdF4 nanoparticles of small size (≤14 nm), and is very close to that of nanoparticles used as T1 contrast agents in magnetic resonance imaging. These suggest the potential of our KGdF4:Yb(3+),Er(3+) nanoparticles as small-sized multifunctional bioprobes.