The development of a seed-mediated growth method for synthesis of iron oxide nanoparticles with tunable size distribution and magnetic properties is reported. The detailed investigation of the size distribution of seed as well as iron oxide nanoparticles during the growth process has been carried out using transmission electron microscopy (TEM). It was observed that the distribution of size gradually becomes narrow with time via the intra-particle ripening process and Oswald ripening process. The monodispersed iron oxide nanoparticles with sizes between 5-10 nm were fabricated using this method by varying the experimental parameters. The magnetic nanoparticles showed well-defined superparamagnetic and blocking temperature due to the size effects in consistent with the TEM images. The thermogravimetric analyses exhibited the size-dependent weight loss of the magnetic nanoparticles. The in vitro cytotoxicity tests were also performed in order to determine the cell viability as a function of size and concentration of the magnetic nanoparticles. The as-prepared iron oxide nanoparticles showed biocompatibility and nontoxicity against the normal as well as cancerous cell lines.