Ultra-small dextran coated maghemite nanoparticles are synthesized via a low temperature modified co-precipitation method. A monoethylene glycol/water solution of 1:1 molar ratios and a fixed apparatus is used at a constant temperature of 5-10 degrees C. The growth of nanoparticles is prohibited due to low temperature synthesis and differs from usual thermal decomposition methods via Ostwald ripening. Strict temperature control and reaction timing of less than 20 minutes are essential to maintain narrow distribution in particle size. These nanoparticles are water-dispersible and biocompatible by capping with polyethylene glycol ligands. The aqueous suspensions are tested for cytotoxic activity on normal human skin fibroblasts. There is no reduction of the cells' viability at any concentration tested, the highest being 1% v/v of the suspension in culture medium, corresponding to the highest concentrations to be administered in vivo. Initial comparison with a T1 MRI contrast agent in sale shows that maghemite nanoparticles exhibit high r1 and r2 relaxivities in MRI tomography and strong contrast in computed tomography, demonstrating that these nanoparticles can be efficient T1, T2 and CT contrast agents.