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Due to its biocompatibility, magnetic fluid or nanoparticles have been used inside the body to deliver medicines or to act as self heating agents to kill cancerous tumors. The estimation of magnetic fluid inside tumors is critical in hyperthermia therapy. This paper reports a unique needle-type GMR sensor fabricated for the purpose of confirming the presence and location, and estimating low-concentration magnetic fluid inside the body, in a minimally invasive way. Theoretical analysis is presented for detecting and estimating magnetic fluid in vivo. Experiments are performed initially to detect magnetic fluid in trays with embedded cavities followed by detecting and estimating magnetic fluid inside pieces of agar. The results show that the needle-type GMR sensor has good potential to be used in clinical applications such as hyperthermia therapy in cancer treatment.