In this work, we report a synthetic method of water dispersible magnetite nanoparticles having oleic acid and poly(ethylene glycol) methyl ether-poly(epsilon-caprolactone) (mPEG-PCL) amphiphilic block copolymer as polymeric stabilizers. The particles were prepared by coprecipitation of Fe(II) and Fe(III) in NH4OH and had bilayer surface with hydrophobic inner layer and hydrophilic corona. mPEG-PCL copolymer was synthesized by a ring-opening polymerization of epsilon-caprolactone using mPEG as a macroinitiator in the presence of stannous octoate catalyst. FTIR and thermogravimetric analysis (TGA) indicated the presence of the copolymer on the particle surface. Roles of reaction parameters, such as stabilizer concentrations and time of ultrasonicating treatment, on percent of magnetite in the complex and its magnetic properties were investigated. Transmission electron microscopy (TEM) showed the average particle size about 9.0 +/- 1.1 nm in diameter. Vibrating sample magnetometry (VSM) measurement indicated that the magnetite nanoparticles were superparamagnetic at room temperature. Approximately 6.8 +/- 0.5% of indomethacin model drug (68 mu g/mg of magnetite) was effectively entrapped on the particles. (C) 2008 Elsevier Ltd. All rights reserved.