At present, nanoparticles are used for various biomedical applications where they facilitate laboratory diagnostics and therapeutics. More specifically for drug delivery purposes, the use of nanoparticles is attracting increasing attention due to their unique capabilities and their negligible side effects not only in cancer therapy but also in the treatment of other ailments. Among all types of nanoparticles, biocompatible superparamagnetic iron oxide nanoparticles (SPIONs) with proper surface architecture and conjugated targeting ligands/proteins have attracted a great deal of attention for drug delivery applications. This review covers recent advances in the development of SPIONs together with their possibilities and limitations from fabrication to application in drug delivery. In addition, the state-of-the-art synthetic routes and surface modification of desired SPIONs for drug delivery purposes are described.