The purpose of this study was to synthesize biocompatible polyvinylpyrrolidone (PVP)-coated iron oxide (PVP-IO) nanoparticles and to evaluate their efficacy as a magnetic resonance imaging (MRI) contrast agent. The PVP-IO nanoparticles were synthesized by a thermal decomposition method and characterized by x-ray diffraction (XRD), transmission electron microscopy (TEM), dynamic light scattering (DLS), and a superconducting quantum interface device (SQUID). The core size of the particles is about 8-10 nm and the overall size is around 20-30 nm. The measured r(2) (reciprocal of T(2) relaxation time) and r2∗ (reciprocal of T2∗ relaxation time) are 141.2 and 338.1 (s mM)(-1), respectively. The particles are highly soluble and stable in various buffers and in serum. The macrophage uptake of PVP-IO is comparable to that of Feridex as measured by a Prussian blue iron stain and phantom study. The signal intensity of a rabbit liver was effectively reduced after intravenous administration of PVP-IO. Therefore PVP-IO nanoparticles are potentially useful for T(2)-weighted MR imaging.