Facile methods for the selective preparation of capped iron oxide nanoparticles (gamma-Fe2O3, Fe3O4) are described. The magnetic oxides are obtained via oxidative transformation of an iron hydroxide gel using H2O2 or (NH4)(2)S2O8 solutions as oxidants. Capping with oleic or other aliphatic acids is established simultaneously in one step by adding a toluene solution of the capping agent and refluxing the resulting biphase system. The method is simple, soft and affords nanoparticles of gamma-Fe2O3 or Fe3O4 of controlled size depending on the reaction conditions. The capped nanoparticles are readily soluble in organic or aqueous media according to the nature of the sheath surrounding the surface of the particles, providing stable and high concentration ferrofluids.