Miniaturized magnetic field sensors are increasingly used in various applications, such as geophysical exploration for minerals and oil, volcanology, earthquake studies, and biomedical imaging. Existing magnetometers lack either the spatial or the temporal resolution or are restricted to costly shielded labs and cannot operate in an unshielded environment. Increasing spatio-temporal resolution would allow for real-time measurements of magnetic fluctuations with high resolution. Here we report on a new nanocomposite-based system for miniaturized magnetic field sensing. The sensor is based on Dy3+-doped magnetite and cobalt ferrite nanoparticles dispersed in a polymer matrix. Operation is feasible at room temperature and in an unshielded environment. A compact fiber-optic interferometer is used as the detection mechanism with 20 fT/√Hz sensitivity. We investigated the magnetic field response of the sensor and demonstrated the measurement of the human heartbeat as a potential application.