We report here the development of stable aqueous suspensions of biocompatible superparamagnetic iron oxide nanoparticles (SPIONs). These so-called ferrofluids are useful in a large spectrum of modern biomedical applications, including novel diagnostic tools and targeted therapeutics. In order to provide prolonged circulation times for the nanoparticles in vivo, the initial iron oxide nanoparticles were coated with a biocompatible polymer poly(ethylene glycol) (PEG). To permit covalent bonding of PEG to the SPION surface, the latter was functionalized with a coupling agent, 3-aminopropyltrimethoxysilane (APS). This novel method of SPION PEGylation has been reproduced in numerous independent preparations. At each preparation step, particular attention was paid to determine the physico-chemical characteristics of the samples using a number of analytical techniques such as atomic absorption, Fourier transform infrared (FT-IR) spectroscopy and Raman spectroscopy, transmission electron microscopy (TEM), photon correlation spectroscopy (PCS, used for hydrodynamic diameter and zeta potential measurements) and magnetization measurements. The results confirm that aqueous suspensions of PEGylated SPIONs are stabilized by steric hindrance over a wide pH range between pH 4 and 10. Furthermore, the fact that the nanoparticle surface is nearly neutral is in agreement with immunological stealthiness expected for the future biomedical applications in vivo.