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Superparamagnetic iron oxide nanoparticles (IONPs) have been studied extensively as contrast agent in magnetic resonance imaging (MRI) owing to high magnetic susceptibility of IONPs core that provides strong enhancement of transverse (T2) relaxation. In physiological media the colloidal stability of IONPs has been improved by hydrophilic, biocompatible and anti-fouling polymer coating such as polyethylene glycol (PEG) and dextran, in order to prevent aggregation and prolong their blood circulation times. The application of IONPs in MRI has generated considerable interest in their use as drug delivery vehicles as well. Limiting the small particle size of IONPs core (< 200 nm) would be appropriate for cell internalization and the integration of a chemotherapeutic agent on the surface of IONPs can be achieved by different strategies, such as physical (electrostatic or hydrophobic) interactions and chemical linkage. Polymers with specific chemical functionalities could be utilized to conjugate drugs via a stimuli-responsive linker (e.g. temperature, pH) on the surface of IONPs, while at the same time impart higher colloidal stability on IONPs. Main advantages of IONPs as dual chemotherapeutic delivery and MRI contrast agent are that they can be used to track the distribution of the drug in the body and they can be guided to target sites using an external magnetic field. In this dissertation polymer functionalized IONPs were synthesized using different grafting methods, such as grafting ‘onto’, grafting ‘from’ and in situ co-precipitation. Polymer chain length, functionality and anchoring groups were investigated to achieve high colloidal stability and 1/T2 relaxivity for an optimal MRI negative contrast agent. Phosphonic acid bearing block copolymers were prepared via controlled radical polymerization techniques, e.g. RAFT and SET-LRP, as IONPs coating. Anti-cancer drug doxorubicin was conjugated via pH-responsive imine linkers to the polymer layer. Cell uptake and intracellular release of doxorubicin were demonstrated using FLIM and confocal microscopy, which resulted in higher therapeutic efficiency of the drug. The incorporation of targeting ligands (e.g. D-mannose, D-galactose) to the periphery of IONPs was controlled via orthogonal ‘click’ chemistry. These carbohydrate moieties were validated by their binding selectivity against lectin and cancer cells for higher efficiency in MRI and cancer therapy.