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Ultrasmall gadolinium oxide (Gd2O3) nanoparticles coated with dextran (M‾ r=1500 amu) were prepared through one-pot synthesis and their potential to act as a T1 MRI contrast agent was investigated. The dextran-coated ultrasmall Gd2O3 nanoparticles were highly water-dispersible, with an average particle diameter of 1.5 nm and an average hydrodynamic diameter of 12.4 nm, and non-toxic, as determined in a cellular cytotoxicity test. The longitudinal (r1) and transverse (r2) water proton relaxivities were estimated to be 12.2 and 29.3 s−1mM−1 (r2/r1=2.4), respectively, larger than those of commercial Gd-chelates. This r1 value is also greater than those for previously reported dextran-coated large Gd2O3 nanoparticles with particle diameter bigger than 20 nm. Positive contrast magnetic resonance (MR) images were obtained after intravenous injection of a sample solution into a mouse tail, demonstrating the potential of dextran-coated ultrasmall Gd2O3 nanoparticles as a T1 MRI contrast agent.