Nanomagnetic particles have great potential in the biomedical applications like MRI contrast enhancement, magnetic separation, targeting delivery and hyperthermia. In this paper, we have explored the possibility of biomedical applications of [Fe1-xBxFe2O4, B=Mn, Co] ferrite. Superparamagnetic particles of substituted ferrites [Fe1-xBxFe2O4, B=Mn, Co (x=0-1)] and their fatty acid coated water base ferrofluids have been successfully prepared by co-precipitation technique using NH4OH/TMAH (Tetramethylammonium hydroxide) as base. In vitro cytocompatibility study of different magnetic fluids was done using HeLa (human cervical carcinoma) cell lines. Co2+-substituted ferrite systems (e.g. CoFe2O4) is more toxic than Mn2+-substituted ferrite systems (e.g. MnFe2O4, Fe0.6Mn0.4Fe2O4). The later is as cytocompatible as Fe3O4. Thus, Fe1-xMnxFe2O4 could be useful in biomedical applications like MRI contrast agent and hyperthermia treatment of cancer. © 2007 Elsevier B.V. All rights reserved.