We analyze magnetometry using an optically levitated nanodiamond. We consider a configuration where a magnetic field gradient couples the mechanical oscillation of the diamond with its spin degree of freedom provided by a nitrogen vacancy center. First, we investigate the measurement of the position spectrum of the mechanical oscillator. We find that conditions of ultrahigh vacuum and feedback cooling allow a magnetic field gradient sensitivity of 1μTm /Hz. At high pressure and room temperature, this sensitivity degrades and can attain a value of the order of 100mTm /Hz. Subsequently, we characterize the magnetic field gradient sensitivity obtainable by maneuvering the spin degrees of freedom using Ramsey interferometry. We find that this technique can offer photon-shot noise and spin-projection noise limited magnetic field gradient sensitivity of 100μTm /Hz. We conclude that this hybrid levitated nanomechanical magnetometer provides a favorable and versatile platform for sensing applications.