In these proceedings, an overview on recent results of a novel imaging modality based on magnetic nanoparticles is given. This imaging concept, called magnetic particle imaging (MPI), falls into the category of functional imaging and, hence, the magnetic nanoparticles may serve as tracers of metabolic processes. Today, there are interesting challenges within the practical set-up of a scanning device and also in the design of new MPI nanoparticles. During this workshop at the University of Lübeck in 2010, scientists from chemical engineering, biology, electrical engineering, physics, computer sciences and medicine discussed the promises and challenges of MPI.