Superparamagnetic iron oxide nanoparticles have a variety of biomedical applications because of their magnetic property and biocompatibility.The basic principles and parameters of the magnetic resonance imaging (MRI) and functional magnetic resonance imaging (fMRI) are presented.Recent advances of iron oxide nanoparticles with various properties acting as MRI contrast agents in the brain related studies are reviewed in this paper.The iron oxide nanoparticles modified or conjugated with monoclonal antibodies, proteins, peptides, nucleotides or other particular polymers, are taken up specifically, and can be used as contrast agents in MRI to enhance detection of neurodegenerative diseases, to monitor targeted drug delivery and therapeutic processes, to image targeted biomolecules or cells;Iron oxide nanoparticles coated with dextran or polyethylene glycol (PEG) have long blood half-life, and are used as fMRI contrast agents to measure haemodynamic changes after enhanced neural activity.The studies on the control of particle sizes and the physicochemical properties of the modifications, increasing crystallinity and consequently saturation magnetization, conjugation with different targeting substances, the developing of hybrid nanoparticles with optical and magnetic properties, and comprehending the interactions between the nanoparticles and biomolecules, cells and tissues, need to be furthered.In our laboratory we have prepared magnetite nanoparticles with particle size ranging from 6~20 nm modified with PEG, PVP and PEI thus the surface charges are from-30 mV to 0 mV and to +40 mV.The nanoparticles are highly stable in aqueous solution with hydrodynamic size smaller than 40 nm.