Natural cilia are hairlike microtubule-based structures that are able to move fluid on the micrometer scale using asymmetric motion. In this article, we follow a biomimetic approach to design artificial cilia lining the inner surfaces of microfluidic channels with the goal of propelling fluid. The artificial cilia consist of polymer films filled with superparamagnetic nanoparticles, which can mimic the motion of natural cilia when subjected to a rotating magnetic field. To obtain the magnetic field and associated magnetization local to the cilia, we solve the Maxwell equations, from which the magnetic body moments and forces can be deduced. To obtain the ciliary motion, we solve the dynamic equations of motion, which are then fully coupled to the Navier-Stokes equations that describe the fluid flow around the cilia, thus taking full account of fluid inertial forces. The dimensionless parameters that govern the deformation behavior of the cilia and the associated fluid flow are arrived at using the principle of virtual work. The physical response of the cilia and the fluid flow for different combinations of elastic, fluid viscous, and inertia forces are identified.