This study focuses on the synthesis of iron oxide (Fe3O4) nanoparticles (NPs), modification of NPs with organic molecules of citric acid (CA) and ascorbic acid (AS), and the incorporation of modified magnetic NPs into poly(vinyl chloride) (PVC) matrix. Biodegradable CA and AS coupling agents can improve the organic functional groups on the surface of Fe3O4NPs. Magnetic PVC/Fe3O4, CA, and AS nanocomposite (NC) films containing 4, 8, and 12 wt% of NPs were successfully manufactured by a fast, green, and safe strategy under ultrasonic irradiation to improve interfacial interactions and dispersion of modified NPs in the polymeric matrix. The surface functionality group's effect on the properties and also on morphology of modified NPs and NCs were analyzed by Fourier‐transform infrared spectroscopy, thermogravimetric analysis, ultraviolet‐visible absorption spectroscopy, X‐ray diffraction, field emission scanning electron microscopy, and transmission electron microscopy. Thermogravimetric analysis indicated that the thermal stability of the NCs was not destroyed in comparison with the PVC polymer. It was found that modified Fe3O4NPs have elevated the flame‐retardancy of the PVC hybrids. In addition, the surface morphology images showed that NPs were dispersed homogenously into the polymer matrix at nanoscale. J. VINYL ADDIT. TECHNOL., 23:E4–E14, 2017. © 2015 Society of Plastics Engineers