Purpose The use of a magnetic nanoparticle tracer and handheld magnetometer for sentinel lymph node biopsy (SLNB) was recently introduced to overcome drawbacks associated with the use of radioisotope tracers. Unlike the gamma probe, the used magnetometers are not only sensitive to the tracer, but also the diamagnetic human body. This potentially limits the performance of the magnetometer when used clinically. Methods A phantom, mimicking the magnetic and mechanical properties of the human axilla, was constructed. The depth performance of two current generation magnetometers was evaluated in this phantom. LN-phantoms with tracer uptake ranging from 5 to 500 μg iron were placed at clinically relevant depths of 2.5, 4 and 5.5 cm. Distance-response curves were obtained to quantify the depth performance of the probes. Results The depth performance of both probes was limited. In the absence of diamagnetic material and forces on the probe (ideal conditions) a LN-phantom with high uptake (500 μg iron) could first be detected at 3.75 cm distance. In the phantom, only superficially placed LNs (2.5 cm) with high uptake (500 μg iron) could be detected from the surface. The penetration depth was insufficient to detect LNs with lower uptake, or which were located deeper. Conclusion The detection distance of the current generation magnetometers is limited, and does not meet the demands formulated by the European Association for Nuclear Medicine for successful transcutaneous SLN localization. Future clinical trials should evaluate whether the limited depth sensitivity is of influence to the clinical outcome of the SLNB procedure.