Abstract: Magnetite nanoparticles were used extensively for various applications. In the present study, magnetite nanoparticles were synthesized and characterized by atomic force microscopy (AFM). AFM images showed that the obtained particles were perfectly spherical. Functionality is afforded to these magnetite nanoparticles by adding biocompatible polymer chitosan during the synthesis. AFM phase image clearly showed that the magnetite core is encapsulated with the polymeric shell. Fourier-transform infrared spectroscopy (FTIR) study showed the chitosan absorption on Fe 2 O 3 nanoparticle surface. The drug sulphamethoxazole was loaded over magnetite nanoparticles and the encapsulation efficiency of drug was calculated at different concentrations of magnetite. The encapsulation efficiency increases with increase in the concentration of magnetite. Thus, an attempt was made in synthesizing drug loaded biopolymer magnetite nanoparticles suitable for targeted drug delivery.