A new nanostructure of CoFe2O4@Y2O3:5 %Tb3+ magnetic-luminescent bifunctional coaxial nanofibers has been successfully fabricated via electrospinning technology using a homemade coaxial spinneret. The morphologies, structures, magnetic and luminescent properties of the final products were investigated in detail by X-ray diffractometry, scanning electron microscopy, transmission electron microscopy, vibrating sample magnetometry, and fluorescence spectroscopy. The results show the CoFe2O4@Y2O3:5 %Tb3+ magnetic-luminescent bifunctional coaxial nanofibers simultaneously possess superior magnetic and luminescent properties due to isolating Y2O3:5 %Tb3+ luminescence center from CoFe2O4 magnetic nanofibers. Furthermore, the luminescent intensity and color of the coaxial nanofibers can be tuned via adjusting the concentrations of rare earth ions. The bifunctional magnetic-luminescent CoFe2O4@Y2O3:5 %Tb3+ coaxial nanofibers have potential applications in biomedical area, such as drug-delivery systems, cell labeling and separation, enhancement for magnetic resonance imaging, and subsequent optical identification. More importantly, the design conception and construction technology are of universal significance to fabricate other bifunctional coaxial nanofibers.