In order to meet the growing interest of magnetic nanoparticles in drug delivery applications, we have synthesized nearly spherical Fe3O4 nanoparticles having size in the 8-20 nm range by a sonication assisted co-precipitation method. To enhance the surface functionality, the synthesized nanoparticles were further stabilized by coating with PEG-400, a hydrophilic and biocompatible polymer. Both bare and PEG-400 coated iron oxide particles were characterized by various techniques to evaluate their suitability for drug delivery applications. For this purpose, the PEG-400 coated iron oxide nanoparticle was loaded with a water soluble anticancer drug daunorubicin hydrochloride. Here, our main focus was to optimize the PEG coating by changing the PEG/iron oxide ratio for effective surface functionalization leading to enhanced drug loading and stability. The drug release study has been monitored in physiological and acidic pH conditions. The functionalized particles exhibited pH responsive drug release with a higher amount of drug release at low pH indicating their potential use as drug delivery vehicles. (C) 2017 Elsevier Ltd. All rights reserved