Although iron oxide magnetic nanoparticles (MNP) have been proposed for numerous biomedical applications, little is known about their biotransformation and long-term toxicity in the body. Dimercaptosuccinic acid (DMSA)-coated magnetic nanoparticles have been proven efficient for in vivo drug delivery, but these results must nonetheless be sustained by comprehensive studies of long-term distribution, degradation and toxicity. We studied DMSA-coated magnetic nanoparticles effects in vitro on NCTC 1469 nonparenchymal hepatocytes, and analyzed their biodistribution and biotransformation in vivo in C57BL/6 mice. Our results indicate that DMSA-coated magnetic nanoparticles have little effect on cell viability, oxidative stress, cell cycle or apoptosis on NCTC 1469 cells in vitro. In vivo distribution and transformation was studied by alternating current magnetic susceptibility measurements, a technique that permits distinction of MNP from other iron species. Our results show that DMSA-coated MNP accumulate in spleen, liver and lung tissues for extended periods of time, in which nanoparticles undergo a process of conversion from superparamagnetic iron oxide nanoparticles to other nonsuperparamagnetic iron forms, with no significant signs of toxicity.