Magnetic nanoparticles have attracted significant attention in nanoscience and nanotechnology due to their unique physicochemical properties. These properties enable their great potential in various biomedical applications, such as hyperthermia, drug delivery, tissue engineering, theranostics, and lab-on-a-chip technologies. Physical and chemical methods are conventionally used for the synthesis of nanoparticles; however, due to several limitations of these methods, research focus has recently shifted towards developing clean and eco-friendly synthesis protocols while maintaining their desirable chemical and physical properties. In this study, iron oxide nanoparticles (FeNPs) were synthesized for the first time using the green synthesis method with extracts from Vitex agnus-castus. The structural and magnetic characterization of FeNPs was carried out using state-of-the-art techniques. The formation of FeNPs was confirmed by UV–vis spectroscopy. The morphology and size distribution were examined by a zetasizer and SEM, which showed agglomerated ring-shaped structures with a moderate size distribution among the nanoparticles. The crystalline structure and phase purity of the FeNPs were analyzed by XRD. FT-IR spectroscopy confirmed the attachment of bioactive plant molecules on the FeNP surfaces. The TGA results indicated the presence of organic molecules on the surface of the nanoparticles. Further studies including temperature-dependent magnetization and coercivity measurements were performed by PPMS and ESR, confirming the soft magnetic characteristics of synthesized FeNPs. Additionally, the dose-dependent toxicity and anti-cancerogenic effects of the FeNPs were screened towards the glioma cancer line (C6) and fibroblast cell line (L929) in vitro using an MTT assay. After 24 h of treatment, inhibitory concentration IC50 values of 26.51 µg/mL (l929) and 10.73 µg/mL (C6) were determined, respectively. These results suggest the potential of the synthesized FeNPs in developing new biocompatible systems for diagnostic and therapeutic purposes. This study contributes to the growing demand for research in nanotechnology by offering a sustainable and effective green synthesis method for FeNPs, expanding their potential applications in nanomedicine.