The performance of nanoparticles for biomedical applications is often assessed by their narrow size distribution, suitable magnetic saturation and low toxicity effects. In this work, superparamagnetic iron oxide nanoparticles (SPIONs) with different size, shape and saturation magnetization levels were synthesized via a co-precipitation technique using ferrous salts with a Fe(3+)/Fe(2+) mole ratio equal to 2. A parametric study is conducted, based on a uniform design-of-experiments methodology and a critical polymer/iron mass ratio (r-ratio) for obtaining SPION with narrow size distribution, suitable magnetic saturation, and optimum biocompatibility is identified. Polyvinyl alcohol (PVA) has been used as the nanoparticle coating material, owing to its low toxicity. A 3-(4,5-dimethylthiazol-2-yl)-2,5-diphenyltetrazolium bromide (MTT) assay is used to investigate the cell biocompatibility/toxicity effects of the samples. From the MTT assay results, it is observed that the biocompatibility of the nanoparticles, based on cell viabilities, can be enhanced by increasing the r-ratio, regardless of the stirring rate. This effect is mainly due to the growth of the particle hydrodynamic size, causing lower cell toxicity effects.