High-quality biocompatible magnetic iron oxide (Fe3O4) nanocrystals were developed through a ligand exchange process of hydrophobically capped nanocrystals with hydrophilic molecules. By simple modulation of the nanocrystal surface ligand charge properties, we have been able to prepare magnetic nanocrystals with excellent intracellular labeling capabilities that efficiently label a variety of cell types without the need for additional transport facilitating agents. The excellent intracellular labeling capability of the newly developed cationic WSIO has further led to successful MRI monitoring of the migration of neural stem cells in rat spinal cord. The magnetic nanocrystals developed here have great potential in applications for labeling of various cell types and also the monitoring of cell-based medical treatments and cancer metastasis.