Maghemite (γ-Fe 2 O 3) nanoparticles for therapeutic applications are prepared from mild steel but the existing synthesis technique is very cumbersome. The entire process takes around 100 days with multiple steps which lack proper understanding. In the current work, maghemite nanoparticles of cuboidal and spheroidal morphologies were prepared from mild steel chips by a novel cost effective oil reduction technique for magnetically guided intravascular drug delivery. The technique developed in this work yields isometric sized γ-Fe 2 O 3 nanoparticles in 6 h with higher saturation magnetization as compared to the existing similar solid state synthesis route. Mass and heat flow kinetics during the heating and quenching steps were studied with the help of Finite element simulations. Qualitative and quantitative analysis of the γ-Fe 2 O 3 phase is performed with the help of x-ray diffraction, transmission electron microscope and x-ray photoelectron spectroscopy. Mechanism for the α-Fe 2 O 3 (haematite) to γ-Fe 2 O 3 (maghemite) phase evolution during the synthesis process is also investigated. Maghemite (γ-Fe2O3) nanoparticles were prepared bya novel cost effective oil reduction technique as mentioned below in the figure. The raw materials included mild steel chips which is one of the most abundant engineering materials. These particles can be used as ideal nanocarriers for targeted drug delivery through the vascular network.