Magnetic cell separation has become a key methodology for the isolation of target cell populations from biological suspensions, covering a wide spectrum of applications from diagnosis and therapy in biomedicine to environmental applications or fundamental research in biology. There now exists a great variety of commercially available separation instruments and reagents, which has permitted rapid dissemination of the technology. However, there is still an increasing demand for new tools and protocols which provide improved selectivity, yield and sensitivity of the separation process while reducing cost and providing a faster response. This review aims to introduce basic principles of magnetic cell separation for the neophyte, while giving an overview of recent research in the field, from the development of new cell labeling strategies to the design of integrated microfluidic cell sorters and of point-of-care platforms combining cell selection, capture, and downstream detection. Finally, we focus on clinical, industrial and environmental applications where magnetic cell separation strategies are amongst the most promising techniques to address the challenges of isolating rare cells.