In the present study, the improved screened Kratzer potential (ISKP) is investigated in the presence of external magnetic and Aharanov-Bohm (AB) fields within the framework of non-relativistic quantum mechanics. The Schrodinger equation is solved via the Nikiforov-Uvarov Functional Analysis (NUFA) method and the energy spectra and the corresponding wave function for the ISKP in the presence of external magnetic fields are obtained in a closed form. The obtained energy spectra are used to study three selected diatomic molecules (H2, HCl and LiH). It is observed that the present of the magnetic and AB fields removes the degeneracy for different values of the control parameter. The thermodynamic and magnetic properties of the ISKP in the present of the magnetic and AB fields are also evaluated. The effects of the control potential parameter on the thermodynamic and magnetic properties of the selected diatomic molecules are discussed.