Iron oxide nanoparticles (IONPs) are frequently used in biomedical applications, yet their toxic potential is still a major concern. While most studies of biosafety focus on cellular responses after exposure to nanomaterials, little is reported to analyze reactions on the surface of nanoparticles as a source of cytotoxicity. Here we report that different intracellular microenvironment in which IONPs are located leads to contradictive outcomes in their abilities to produce free radicals. We first verified pH-dependent peroxidase-like and catalase-like activities of IONPs and investigated how they interact with hydrogen peroxide (H(2)O(2)) within cells. Results showed that IONPs had a concentration-dependent cytotoxicity on human glioma U251 cells, and they could enhance H(2)O(2)-induced cell damage dramatically. By conducting electron spin resonance spectroscopy experiments, we showed that both Fe(3)O(4) and γ-Fe(2)O(3) nanoparticles could catalyze H(2)O(2) to produce hydroxyl radicals in acidic lysosome mimic conditions, with relative potency Fe(3)O(4) > γ-Fe(2)O(3), which was consistent with their peroxidase-like activities. However, no hydroxyl radicals were observed in neutral cytosol mimic conditions with both nanoparticles. Instead, they decomposed H(2)O(2) into H(2)O and O(2) directly in this condition through catalase-like activities. Transmission electron micrographs revealed that IONPs located in lysosomes in cells, the acidic environment of which may contribute to hydroxyl radical production. This is the first study regarding cytotoxicity based on their enzyme-like activities. Since H(2)O(2) is continuously produced in cells, our data indicate that lysosome-escaped strategy for IONP delivery would be an efficient way to diminish long-term toxic potential.