Magnetospirillum gryphiswaldense MSR-1 synthesizes membrane-enclosed magnetite (Fe3O4) nanoparticles, magnetosomes, for magnetotaxis. Formation of these organelles involves a complex process comprising key steps which are governed by specific magnetosome-associated proteins. MamB, a cation diffusion facilitator (CDF) family member has been implicated in magnetosome-directed iron transport. However, deletion mutagenesis studies revealed that MamB is essential for the formation of magnetosome membrane vesicles, but its precise role remains elusive. In this study, we employed a multi-disciplinary approach to define the role of MamB during magnetosome formation. Using site-directed mutagenesis complemented by structural analyses, fluorescence microscopy and cryo-electron tomography, we show that MamB is most likely an active magnetosome-directed transporter serving two distinct, yet essential functions. First, MamB initiates magnetosome vesicle formation in a transport-independent process, probably by serving as a landmark protein. Second, MamB transport activity is required for magnetite nucleation. Furthermore, by determining the crystal structure of the MamB cytosolic C-terminal domain, we also provide mechanistic insight into transport regulation. Additionally, we present evidence that magnetosome vesicle growth and chain formation are independent of magnetite nucleation and magnetic interactions respectively. Together, our data provide novel insight into the role of the key bifunctional magnetosome protein MamB, and the early steps of magnetosome formation.