We demonstrate the synthesis of water-soluble allylamine terminated Fe doped Si (SixFe) nanoparticles as bimodal agents for optical and magnetic imaging. The preparation involves the synthesis of a single source iron containing precursor, Na4Si4 with x% Fe (x = 1, 5, 10), and its subsequent reaction with NH4Br to produce hydrogen terminated SixFe nanoparticles. The hydrogen-capped nanoparticles are further terminated with allylamine via thermal hydrosilylation. Transmission electron microscopy (TEM) indicates that the average particle diameter is ~3.0±1.0 nm. The Si5Fe nanoparticles show strong photoluminescence quantum yield in water (~ 10 %) with significant T2 contrast (r2/r1value of 4.31). Electron paramagnetic resonance (EPR) and Mössbauer spectroscopies indicate that iron in the nanoparticles is in the +3 oxidation state. Analysis of cytotoxicity using the resazurin assay on HepG2 liver cells indicates that the particles have minimal toxicity.