Magnetic iron oxide (Magnetite, Fe₃O₄) nanoparticles are widely utilized in magnetic resonance imaging (MRI) and drug delivery applications due to their superparamagnetism. Surface coatings are often employed to change the properties of the magnetite nanoparticles or to modulate their biological responses. In this study, magnetite nanoparticles were fabricated through hydrothermal synthesis. Hydrophobicity is often increased by surface modification with oleic acid. In this study, however, hydrophobicity was introduced through surface modification with n-octyltriethoxysilane. Both the uncoated (hydrophilic) and coated (hydrophobic) individual nanoparticle sizes measured below 20 nm in diameter, a size range in which magnetite nanoparticles exhibit superparamagnetism. Both types of nanoparticles formed aggregates which were characterized by SEM, TEM, and dynamic light scattering (DLS). The coating process significantly increased both individual particle diameter and aggregate sizes. We tested the neurotoxicity of newly synthesized nanoparticles with two mammalian cell lines, PC12 (rat pheochromocytoma) and ReNcell VM (human neural stem cells). Significant differences were observed in cytotoxicity profiles, which suggests that the cell type (rodent versus human) or the presence of serum matters for nanoparticle toxicology studies. Differences in nanoparticle associations/uptake between the two cell types were observed with Prussian Blue staining. Finally, safe concentrations which did not significantly affect neuronal differentiation profiles were identified for further development of the nanoparticles.