Superparamagnetic iron oxide nanoparticles (SPIONPs) are widely used in clinical research. The single domain nanoparticles are used in magnetic fluid hyperthermia (MFH) to treat cancer. When nanoparticles are exposed to an external magnetic field, it generates heat destroying tumour cells. SPIONPs have a large surface area, so the particles tend to aggregate, which leads to the destabilization of the colloidal system. To enhance the stability and biocompatibility of the nanomaterials, it is necessary to coat the surface with biocompatible material. Magnetite (FeO) is a superparamagnetic nanoparticle (SPNPs) that was functionalized with oleic acid (OA) by sol-gel process using ethanol as the solvent. The oleic acid-coated magnetite (OA-FeO) was characterized by X-ray powder diffraction (XRD), Fourier transform infrared spectroscopy (FTIR), transmission electron microscopy (TEM), thermogravimetric analysis (TGA), UV-Visible diffuse reflectance spectroscopy (UV-DRS) and vibrating sample magnetometer (VSM). The haemolysis test has been used to investigate the haemocompatibility properties of nanomaterials. Hyperthermia study shows a high SAR value for the concentration of 1 mg/ml at the field of 600 Oe and frequency of 316 kHz. The OA coating enhanced the haemocompatibility of synthesized magnetite nanoparticles which can be used for magnetic fluid hyperthermia applications.