Superparamagnetic as well as fine ferrimagnetic particles such as Fe304, have been extensively used in magnetic field induced localized hyperthermia for the treatment of cancer. The magnetic materials with Curie temperature (T c) between 42 and 50°C, with sufficient biocompatibility are the best candidates for effective treatment such that during therapy it acts as in vivo temperature control switch and thus over heating could be avoided. Ultrafine particles of substituted ferrite Co1-aZnaFe 2O4 and substituted yttrium-iron garnet Y 3Fe5-xAlxO12 have been prepared through microwave refluxing and citrate-gel route respectively. Single-phase compounds were obtained with particle size below 100 nm. In order to make these magnetic nano particles biocompatible, we have attempted to coat these above said composition by alumina. The coating of alumina was done by hydrolysis method. The coating of hydrous aluminium oxide has been done over the magnetic particles by aging the preformed solid particles in the solution of aluminium sulfate and formamide at elevated temperatures. In vitro study is carried out to verify the innocuousness of coated materials towards cells. In vitro biocompatibility study has been carried out by cell culture method for a period of three days using human WBC cell lines. Study of cell counts and SEM images indicates the cells viability/growth. The in vitro experiments show that the coated materials are biocompatible.