A unique decelerated hydrolytic procedure is developed and reported here for the preparation of ultrasmall nanoparticles (NPs) of PVP-coated BiOI with a narrow size distribution, i.e., 2.8 ± 0.5 nm. The crystal structure of this compound is determined by X-ray powder diffraction using the bulk materials. The stability, cytotoxicity, and potential use of the PVP-coated ultrasmall BiOI NPs as a CT contrast agent are investigated. Because of the combined X-ray attenuation effect of bismuth and iodine, such NPs exhibit a CT value that is among the best of those of the inorganic nanoparticle-based CT contrast agents reported in the literature.