Quantum magnetometers based on optical pumping can achieve sensitivity as high as what SQUID-based devices can attain. In this paper, we discuss the principle of operation and the optimal design of an optically pumped quantum magnetometer. The ultimate intrinsic sensitivity is calculated showing that optimal performance of the magnetometer is attained with an optical pump power of 20 μW and an operation temperature of 48°C. Results show that the ultimate intrinsic sensitivity of the quantum magnetometer that can be achieved is 327 fT/Hz1/2 over a bandwidth of 26 Hz and that this sensitivity drops to 130 pT/Hz1/2 in the presence of environmental noise. The quantum magnetometer is shown to be capable of detecting a sinusoidal magnetic field of amplitude as low as 15 pT oscillating at 25 Hz.