The water dispensability and stability of high quality iron oxide nanoparticles synthesized in organic solvents are major issues for biomedical and biological applications. In this paper, a versatile approach for preparing water-soluble iron oxide nanoparticles with great stability and selective surface functionality ( COOH, -NH2, or -SH) was demonstrated. The hydrophobic nanoparticles were first synthesized by the thermal decomposition of an iron oleate complex in organic solvent. Subsequently, the hydrophobic coatings of nanoparticles were replaced with poly(acrylic acid), polyethylenimine, or glutathione, yielding charged nanoparticles in aqueous solution. Two parameters were found to be critical for obtaining highly stable nanoparticle dispersions: the original coating and the surfactant-to-nanoparticle ratio. These charged nanoparticles exhibited different stabilities in biological buffers, which were directly influenced by the surface coatings. This report will provide significant practical value in exploring the biological or biomedical applications of iron oxide nanoparticles.