the invention discloses an aqueous method of making polymer coated superparamagnetic nanoparticles . the method comprises providing a mixture of iron salts in an aqueous solution of hydrochloric acid . a solution of ammonium hydroxide is added to the mixture and stirred . stirring continues with an aqueous solution of one or more biocompatible polymers so as to promote formation of polymer coated iron nanoparticles in suspension , wherein optionally at least one of the polymers in the coating may be aminated . centrifuging the suspension leaves a supernatant without large particles . filtering the supernatant through an ultrafiltration membrane and collecting the filtrate recovers polymer coated nanoparticles . crosslinking the polymer is effected by treatment with a solution of epichlorohydrin and sodium hydroxide while stirring vigorously for up to about eight hours . optionally aminating the polymer may be accomplished by treatment with ammonia after crosslinking and then removing remaining free epichlorohydrin . nanoparticles made by the method are included in the invention .