A magnetic hammer having a handle and a hammer body coupled to the handle includes a cylindrical magnetic insert having first and second ends with the magnetic poles of the insert being aligned with the central axis of the insert. A cylindrical retainer having first and second ends includes a cylindrical chamber which is sized to receive and retain the magnetic insert. The axis of the magnetic insert is aligned with the axis of the cylindrical retainer and the first end of the magnetic insert and the first end of the cylindrical retainer form the hammering face of the hammer. The second end of the cylindrical retainer is coupled to the hammer body.