Magnetic iron oxide nanoparticles are promising material for various biological applications. In the recent decades, magnetic iron oxide nanoparticles (MNPs) have great attention in biomedical applications such as drug delivery, magnetic resonance imaging (MRI) and magnetic fluid hyperthermia (MFH). This review focuses on the colloidal stability and monodispersity properties of MNPs, which pay more attention toward biomedical applications. The simplest and the most promising method for the synthesis of MNPs is co-precipitation. The biocompatible MNPs are more interested in MRI application. This review also apportions synthesis, characterization and applications of MNP in biological and biomedical as theranostics and imaging.