Fe3O4 nanoparticles have been extensively studied for biomedical applications including magnetic resonance imaging, chemotherapeutic delivery and gene delivery due to their advantageous properties of superparamagnetism, biocompatibility and biodegradability. However, ultrafine, monodisperse and sized controlled nanoparticles synthesized by thermal decomposition are commonly encapsulated by hydrophobic layers and can’t be dispersed in aqueous solutions. Besides, during the surface modification of nanoparticles, it is still difficult to obtain a highly stable and dense polymeric surface layer. To this end, a robust multi-step polyethylene glycol(PEG)ylation approach is presented to produce biocompatible multilayer surface coated magnetic iron oxide nanoparticles that are hydrophilic and display long-term stability in biological media. Ultrafine, monodisperse and 12nm hydrophobic nanoparticles were first synthesized by elevated temperature decomposition of nontoxic iron oleate complex in the presence of 1-octadecene and oleic acid. Subsequently, the oleic acid layer of nanoparticles was replaced by 3-(triethoxysilyl)propyl succinic anhydride(SSA) through ligand exchange to form SSA layer coated nanoparticles. Then, during the first step of PEGylation, to prevent the aggregation of nanoparticles, adequate amount of methyl PEG-NH2 was attached to the part of SSA layer through the coupling reaction of functional groups. And in the second step of PEGylation, NH2-PEG-NH2 was attached to SSA to achieve a SSA/PEG dense multilayer surface with an adequate number of functional groups for further conjugation of therapeutics or targeting agents. The tools such as transmission electron microscopy (TEM), dynamic light scattering (DLS), Fourier transform infrared spectroscopy (FTIR) were utilized to characterize the structure and properties of surface modified nanoparticles. The excellent dispensability and stability of surface modified nanoparticles in biological media was confirmed by no significant size change after at least 30 day’s incubation in Dulbecco’s phosphate buffered saline (PBS) and dulbecco’s modified Eagle’s medium (DMEM) with 10% of fetal bovine serum (FBS), demonstrating a huge potential for biomedical applications.