Magnetic nanoparticles with tailored surface chemistry are widely used for a number of different in vivo applications, ranging from tissue repair and magnetic cell separation through to cancer-hyperthermia, drug delivery and magnetic resonance imaging contrast enhancement. A major requirement for all these biomedical applications is that these nanoparticles must have high magnetization values and sizes smaller than 100 nm with a narrow particle size distribution. Thus nanoparticles must have uniform physical and chemical properties. For these applications, a tailored surface coating/shell needs to be engineered, which has to be non-toxic, biocompatible and make allowance for targetable drug delivery with particle localization in a targeted area. Most work in this field has been done on improving the biocompatibility of the nanoparticles. Only a few scientific investigations have been carried out on improving the quality of magnetic nanoparticles with specific focus on the nanoparticle’s surface chemistry, size distribution and shape (which directly influences the magnetic properties). All these particles also need to be properly characterized in order to get a protocol for the quality control of these particles, the nature of the surface coatings and their subsequent geometric arrangement. This will ultimately determine the overall size of the colloids and also plays a significant role in biokinetics and biodistribution of nanoparticles in the body. This review highlights recent advances in the synthetic chemistry, magnetic characterization and biological applications of inorganic/organic - core/shell FexOy based magnetic nanoparticles with specific focus on using the two popular surfactants for producing MNPs namely oleic acid and/or oleylamine as capping agents. Although the main nano-magnets under discussion are magnetite (Fe3O4) nanoparticles, maghemite (γ-Fe2O3) is also briefly mentioned.