Cerium oxide nanoparticles (CeO2-NPs) have great applications in different industries, including nanomedicine. However, some studies report CeO2-NPs-related toxicity issues that limit their usage and efficiency. In this study, the sol–gel method was applied to the synthesis of CeO2-NPs using poly(allylamine) (PAA) as a capping and/or stabilizing agent. The different molecular weights of PAA (15,000, 17,000, and 65,000 g/mol) were used to investigate the physico-chemical and biological properties of the NPs. In order to understand their performance as an anticancer agent, three cell lines (MCF7, HeLa, and erythrocyte) were analyzed by MTT assay and RBC hemolysis assay. The results showed that the CeO2-NPs had anticancer effects on the viability of MCF7 cells with half-maximal inhibitory concentration (IC50) values of 17.44 ± 7.32, 6.17 ± 1.68, and 0.12 ± 0.03 μg/mL for PAA15000, PAA17000, PAA65000, respectively. As for HeLa cells, IC50 values reduced considerably to 8.09 ± 1.55, 2.11 ± 0.33, and 0.20 ± 0.01 μg/mL, in order. A decrease in the viability of cancer cells was associated with the 50% hemolytic concentration (HC50) of 0.022 ± 0.001 mg/mL for PAA15000, 3.74 ± 0.58 mg/mL for PAA17000, and 7.35 ± 1.32 mg/mL for PAA65000. Ultraviolet-Visible (UV-vis) spectroscopy indicated that an increase in the PAA molecular weight led to a blue shift in the bandgap and high amounts of Ce3+ on the surface of the nanoceria. Thus, PAA65000 could be considered as a biocompatible nanoengineered biomaterial for potential applications in cancer nanomedicine.