We developed biofunctionalized nanoparticles with magnetic properties by immobilizing diethyleneglycol (DEG) on Gd2O3, and PEGilation of small particulate gadolinium oxide (SPGO) with two methoxy-polyethyleneglycol-silane (mPEG-Silane 550 and 2000 Da) using a new supervised polyol route, described recently. In conjunction to the previous study to achieve a high quality synthesis and increase in the product yield of nanoparticles; assessment of the effects of functionalization, chemisorption and altered reaction conditions, such as NaOH concentration, temperature, reaction time and their solubility, on size reproducibility were determined as the goals of this study. Moreover, the effects of centrifugation, filtration and dialysis of the solution on the nono magnetic particle size values and their stability against aggregation have been evaluated. Optimization of reaction parameters led to strong coating of magnetic nanoparticles with the ligands which increases the reproducibility of particle size measurements. Furthermore, the ligand-coated nanoparticles showed enhanced colloidal stability as a result of the steric stabilization function of the ligands grafted on the surface of particles. The experiments showed that DEG and mPEG-silane (550 and 2000 Dalton) are chemisorbed on the particle surfaces of Gd2O3 and SPGO which led to particle sizes of 5.9 ± 0.13 nm, 51.3 ± 1.46 nm and 194.2 ± 22.1 nm, respectively. The small size of DEG-Gd2O3 is acceptably below the cutoff of 6nm, enabling easy diffusion through lymphatics and filtration from kidney, and thus provides a great deal of potential for further in-vivo and in-vitro application.