Surface functionalization of a series of nanosized iron oxide particles (average diameter around 6 nm) with oleic acid was realized in this study. The aim is to suspend the surface-functionalized nanoparticulated materials in insulating mineral oil and evaluate their colloidal stability as a function of time. Nanoparticulated samples presenting stoichiometry close to maghemite were obtained by oxidation of a freshly precipitated magnetite sample. Systematic variations observed in the Fe3+/Fe2+ ratio, average particle size, and lattice constant were attributed to differences in oxidation route and oxidation condition employed. Morphological, compositional, thermal, optical and magnetic characterization techniques were used in the investigation of native (P, PN1, PN2, POX1, POX3, and POX7) and surface-functionalized (POA, PN1OA, PN2OA, POX1OA, POX3OA, and POX7OA) samples. While suspending the oleic-acid-coated nanosized iron oxide particles in insulating mineral oil, the best colloidal stability was achieved at the oxidation profile of Fe3+/Fe2+ = 40 (5.9 nm average core diameter), leading to a surface grafting coefficient of about 75% of a full monolayer coating of chemisorbed species only and resulting in the smallest observed hydrodynamic radius (8.1 nm). Within the range of our investigation, our findings reveal the characteristics and the chemical protocol used to produce a magnetic fluid sample embodying long-term colloidal stability, thus representing a very much promising material for application as a refrigerating fluid in power transformers and related devices.