Ultra-small superparamagnetic iron oxide nanoparticles (SPIOs) were synthesized by co-precipitation of iron chloride salts with ammonia and then encapsulated with thin (~2nm) layers of silica. The particles have been characterized for size, diffraction pattern, surface charge, and magnetic properties. This rapid and economical synthesis has a number of industrial applications; however, the silica-coated particles have been optimized for use in medical applications as MR contrast agents, biosensors, DNA capturing, bioseparation and enzyme immobilization.