Magnetite (FeO) nanoparticles with uniform sizes of 10, 20, and 31 nm were prepared by thermal decomposition of Fe(III) oleate or mandelate in a high-boiling point solvent (>320 °C). To render the particles with hydrophilic and antifouling properties, their surface was coated with a PEG-containing bisphosphonate anchoring group. The PEGylated particles were characterized by a range of physicochemical methods, including dynamic light scattering, transmission electron microscopy, thermogravimetric analysis, Fourier transform infrared spectroscopy, and magnetization measurements. As the particle size increased from 10 to 31 nm, the amount of PEG coating decreased from 28.5 to 9 wt.%. The PEG formed a dense brush-like shell on the particle surface, which prevented particles from aggregating in water and PBS (pH 7.4) and maximized the circulation time in vivo. Magnetic resonance relaxometry confirmed that the PEG-modified FeO nanoparticles had high relaxivity, which increased with increasing particle size. In the in vivo experiments in a mouse model, the particles provided visible contrast enhancement in the magnetic resonance images. Almost 70% of administrated 20-nm magnetic nanoparticles still circulated in the blood stream after four hours; however, their retention in the tumor was rather low, which was likely due to the antifouling properties of PEG.