Superparamagnetic iron oxide nanoparticles (SPIONs) are a foundational platform for a variety of biomedical applications. Of particular interest is Magnetic Particle Imaging (MPI), which is a growing area of research and development due to its advantages including high resolution and sensitivity with positive contrast. There has been significant work in the area of in vivo optimization of SPIONs for MPI as well as their biodistribution in and clearance from the body. However, little is known about the dynamics of SPIONs following cellular internalization which may limit their usefulness in a variety of potential imaging and treatment applications. This work shows a clear 20% decrease in magnetic performance of SPIONs, as observed by Magnetic Particle Spectroscopy (MPS), after internalization and systematic consideration of applicable factors that affect SPION signal generation, including microstructure, environment, and interparticle interactions. There is no observed change to SPION microstructure after internalization, and the surrounding environment plays little to no role in magnetic response for the SPIONs studied here. Interparticle interactions described by dipole-dipole coupling of SPIONs held close to one another after internalization are shown to be the dominant cause of decreased magnetic performance in cells. These conclusions were drawn from transmission electron microscopy (TEM) image analysis at relevant length scales, experimentally prepared and characterized SPIONs in varied environmental conditions, and theoretical modeling with Monte Carlo simulations.