Lab-on-a-chip (LOC) devices integrate multiple laboratory functions and processes to a miniaturized chip format. Many LOC devices are used in a wide range of biomedical and other analytical applications including rapid pathogen detection, clinical diagnosis, electrophoresis, flow cytometry, and protein and DNA analysis. LOC devices can be fabricated from many types of material including various polymers, glass/silicon, or combinations of these materials. A broad variety of fabrication technologies are used for LOC device fabrication. LOC systems have several common features including microfluidics (e.g. channels, micro-pumps, mixers and valves) and sensing capabilities. This paper describes a technique for the fabrication of a micro-pump that can be used in implantable biocompatible devices. This paper will also discuss the synthesis and properties of biocompatible iron oxide nanoparticles (NPs) for AC electrokinetic micro-pumping. Iron oxide NP will be incorporated with PDMS (polydimithylsiloxane) to obtain biocompatible nanocomposite. The use of photoluminescence, hydrophobic, and reflective optical response of these materials for in-vitro and in-vivo sensing and micro-pumping will be highlighted.