Over the past 50 y, behavioral experiments have produced a large body of evidence for the existence of a magnetic sense in a wide range of animals. However, the underlying sensory physiology remains poorly understood due to the elusiveness of the magnetosensory structures. Here we present an effective method for isolating and characterizing potential magnetite-based magnetoreceptor cells. In essence, a rotating magnetic field is employed to visually identify, within a dissociated tissue preparation, cells that contain magnetic material by their rotational behavior. As a tissue of choice, we selected trout olfactory epithelium that has been previously suggested to host candidate magnetoreceptor cells. We were able to reproducibly detect magnetic cells and to determine their magnetic dipole moment. The obtained values (4 to 100 fAm2) greatly exceed previous estimates (0.5 fAm2). The magnetism of the cells is due to a μm-sized intracellular structure of iron-rich crystals, most likely single-domain magnetite. In confocal reflectance imaging, these produce bright reflective spots close to the cell membrane. The magnetic inclusions are found to be firmly coupled to the cell membrane, enabling a direct transduction of mechanical stress produced by magnetic torque acting on the cellular dipole in situ. Our results show that the magnetically identified cells clearly meet the physical requirements for a magnetoreceptor capable of rapidly detecting small changes in the external magnetic field. This would also explain interference of ac powerline magnetic fields with magnetoreception, as reported in cattle.