Iron (III) oxide magnetic nanoparticles have provided us a multitude of new tools to explore biological and other scientific systems on small length scales. The opening up of single cell or single molecule phenomena to experimental investigations present an important step forward and promises to yield new insights. This review depicts some important and most commonly used methodologies for the engineering of iron oxide magnetic nanoparticles including superparamagnetic iron oxide nanoparticles and ultra-small superparamagnetic iron oxide nanoparticles, important features of these synthesis methods and their applications in different fields of life proving it as an emerging material. Most important task in nanoscale synthesis of iron oxide is to control morphology and contain it within a narrow size distribution. These processes include sol–gel method, hydrothermal method, sonochemical method, co-precipitation and micro emulsion methods. These processes are essentially highly controlled to fabricate the desire material with appropriate properties. Synthesis of mono disperse nanometer-sized magnetic particles of metal alloys and metal oxides is an active research area because of their potential technological ramifications ranging from ultrahigh-density magnetic storage media, to biological imaging. Size, size distribution, shape, and dimensionality are important for the properties of these magnetic materials. Nanoparticles of various iron oxides (Fe3O4 and c-Fe2O3 in particular) have been widely used in a range of biological applications. Iron oxide magnetic nanoparticles can be designed to exhibit novel and significantly improved physical, chemical and biological properties, phenomena and strategies as a result of the limited size of their constituent particles. Iron oxide nanoparticles can be designed to exhibit novel and significantly improved physical, chemical and biological properties, phenomena and strategies as a result of the limited size of their constituent particles by using various methodologies.