Functionalized Magnetic Iron Oxide Nanoparticles (FMIONPs) are being explored for the development of various biomedical applications, e.g., cancer chemotherapy and/or several other radiological or diagnostic purposes. However, the effects of these NPs per se on the central nervous system (CNS) injury or repair are not well known. This review deals with different aspects of FMIONPs in relation to brain function based on the current literature as well as our own investigation in animal models of CNS injuries. It appears that FMIONPs are innocuous when administered intravenously within the CNS under normal conditions. However, abnormal reactions to FMIONPs in the brain or spinal cord could be seen if they are combined with CNS injuries e.g., hyperthermia or traumatic insults to the brain or spinal cord. Thus, administration of FMIONPs in vivo following whole body hyperthermia (WBH) or a focal spinal cord injury (SCI) exacerbates cellular damage. Since FMIONPs could help in diagnostic purposes or enhance the biological effects of radiotherapy/chemotherapy it is likely that these NPs may have some adverse reaction as well under disease condition. Thus, under such situation, adjuvant therapy e.g., Cerebrolysin (Ever NeuroPharma, Austria), a suitable combination of several neurotrophic factors and active peptide fragments are the need of the hour to contain such cellular damages caused by the FMIONPs in vivo. Our observations show that co-administration of Cerebrolysin prevents the FMIONPs induced pathologies associated with CNS injuries. These observations support the idea that FMIONPs are safe for the CNS in disease conditions when co-administered with cerebrolysin. This indicates that cerebrolysin could be used as an adjunct therapy to prevent cellular damages in disease conditions where the use of FMIONPs is required for better efficacy e.g., cancer treatment.