Cellulose akaganeite hybrid nanocrystals (CAHNCs) were synthesized in situ from a ferrous chloride aqueous solution in the presence of pre-oxidized cellulose nanocrystals as a reducing agent for the reduction of dissolved ferrous ions under heat treatment and neutral gas flow. The characterization of the produced nanostructures by field emission scanning electron microscopy (FESEM), X-ray diffraction (XRD), attenuated total reflection-Fourier transform infrared (ATR-FTIR) spectroscopy, and vibrating sample magnetometry (VSM) confirmed that the fabricated one-dimensional nanoparticles were composed of rod-like cellulose nanocrystal cores coated by the shells of spherical chloride-containing akaganeite nanoparticles with an average diameter of about 4–6 nm, and they had superparamagnetic properties. To compare the magnetic response of the synthetized CAHNCs with the starting diamagnetic CNCs, the static magnetic fields of 1, 2, 4, and 8 T generated by a superconducting magnet were applied to the suspensions of either material during the dewatering process. In contrast to the CNCs, the CAHNCs were well-aligned under magnetic field intensity of 4 T and above. Moreover, the magnetic susceptibility of the CAHNCs was different from that of the CNCs by exhibiting magnetic field induced self-assembly parallel to the external magnetic field direction. Cellulose akaganeite hybrid microcrystals (CAHMCs) were added to the system as micro-scale models, which also confirmed the magnetic field induced self-assembly. Polarizing optical microscopy, FESEM, and wide-angle X-ray diffraction (WAXD) strongly confirmed the unidirectional magnetic field induced self-assembly of the CAHNCs parallel to the external magnetic field even under the magnetic intensity of 2 T. The reasons behind these observations are extensively discussed.