In our studies, related to projects developing nanoparticles for sentinel node detection of breast cancer [Nanomagdye FP7, EU project grant agreement nr NMP3-SL-2008-214032 and Nanomatrix INTERREG IV program Upper Rhine Valley A21], we focused on the magnetic iron oxide nanoparticles in 10-40 nm range made by precipitation in aqueous media, on the functionalization by dendrons ensuring the stabilization in aqueous media and on the effect of grafting on the magnetic properties. By combining magnetic measurements, X-ray diffraction and Mössbauer spectrometry, we showed that the nanoparticles can be described by a core-shell model, that is, a magnetite core surrounded by an oxidized layer close to maghemite. The fractional volume of maghemite increases as the particle size decreases so that below 20 nm, the particle is oxidized in the whole volume and the nanoparticles cannot be properly labeled as “magnetite”. The oxide/molecule interactions have a strong effect on the magnetic structure and properties. In case of phosphonate coupling agent, the saturation magnetization is increased and no spin canting is observed due to a covalent bonding.