Using trapped ions in an entangled state we propose detecting a magnetic dipole of a single atom at distance of a few $mu$m. This requires a measurement of the magnetic field gradient at a level of about 10$^{-13}$ Tesla/$mu$m. We discuss applications e.g. in determining a wide variation of ionic magnetic moments, for investigating the magnetic substructure of ions with a level structure not accessible for optical cooling and detection,and for studying exotic or rare ions, and molecular ions. The scheme may also be used for measureing spin imbalances of neutral atoms or atomic ensembles trapped by optical dipole forces. As the proposed method relies on techniques well established in ion trap quantum information processing it is within reach of current technology.