Malaria remains a significant global health problem with nearly half of the world’s population living in malaria-endemic regions and more than 500,000 deaths from malaria and its complications each year. Although significant success has been achieved in malaria therapeutic development, accurate early-stage diagnosis of the disease remains a barrier to eradication, especially in low-resource areas. Optical microscopy and antibody-based diagnostic tests are commonly used for identifying the infected population. However, the cost and reliability of these methods in low-resource environments limit the efficacy and accuracy of malaria screening. In this work, we designed, built, and validated a portable optical diagnostic system for malaria detection. The system is based on the detection of Hemozoin, which is a magnetic nanoparticle byproduct of the parasite. Therefore, the presence of Hemozoin is indicative of malarial infection. Unlike all other naturally occurring materials in the blood, hemozoin is paramagnetic. This property is the foundation of our magneto-optic detection system. In our experiments, β-hematin (a mimic for hemozoin) is used to allow for the verification of our device without the need to handle malaria-infected samples. The system is optimized and tested with spherical iron oxide magnetic nanoparticles and β-hematin in different concentrations of PEG solutions. Finally, β-hematin in whole rabbit blood is detected with this system. Detection limits of <8.1 ng/mL (corresponding to <26 parasites/μL) in 500μL of blood are demonstrated. The threshold for early stage malaria infection is 100 parasites/μL. Therefore, the present system is easily able to detect within a clinically relevant range.