Separation of cells is a key application area of lab-on-a-chip (LOC) devices. Among the various methods, magnetic separation of cells utilizing microfluidic devices offers the merits of biocompatibility, efficiency, and simplicity. This review discusses the fundamental physics involved in using magnetic force to separate particles, and identifies the optimisation parameters and corresponding methods for increasing the magnetic force. The paper then elaborates the design considerations of LOC devices for continuous-flow magnetic cell separation. Examples from the recently published literature illustrate these state-of-the-art techniques.