We demonstrate a unique approach for preparing high quality iron oxide (Fe3O4) nanoparticles functionalized by newly developed multifunctional dendron ligands for biomedical applications. These particles are suitable for magnetic resonance imaging (MRI), highly stable in aqueous solutions as well as physiological media and not cytotoxic. In particular, oleic acid capped Fe3O4 particles (d = 12 ± 0.8 nm) were modified in a ligand exchange process by investigating several dendron ligands of variable size and an adjustable number of polar end groups. The dendron based ligands lead only to a slight increase in hydrodynamic diameter of the nanoparticles after the ligand exchange process (∼6 nm). They also allow an adjustment of the particle polarity as well as a gradually variable surface functionalization. Light scattering, transmission electron microscopy, and visible spectroscopy studies show consistently that the dendron-capped iron oxide nanoparticles exhibit excellent stability in various physiological media as well as aqueous solutions in a broad pH range. It is also demonstrated by magnetic resonance studies that the magnetic relaxivity is almost not affected by the ligand exchange. Therefore, such small particles might be of specific interest for cardiovascular MRI and MRI of extravascular targets. In addition, the present approach opens new possibilities for the specific linking of biomolecules to the particle surface, which can be beneficial for various biological sensing and therapeutic applications. The cytotoxicity of the Fe3O4 nanoparticles was evaluated using the WST-8 assay. In the examined concentration range up to 100 μg Fe/mL no significant decrease in cell viability was detected.