Most magnetic materials used in today's technology are either metals or metal oxides. From a chemist's point of view, their preparation in bulk form is a simple task, however a bit more challenging aspect relates to phase purity, crystal structure and morphology which are responsible for better performance of these functional materials. The reduction of the crystal dimensionality to the nanometer scale brings a new degree of complexity to their synthesis. The area of science dealing with the development of magnetic nanoparticles, originates from solid-state inorganic chemistry and physics on one hand, and from the colloid and surface chemistry on the other.Ferrofluids, the colloidal dispersions of magnetic iron oxides in hydrocarbon oil, represent probably the first application of magnetic materials in the new form. Their preparation was based on mechanical grinding of the bulk oxide in the presence of surfactant oleic acid and a hydrocarbon solvent. By that time, an alternative approach which originated from the discoveries of colloidal chemistry was introduced, according to which the single metal ion precursors were used in chemical reactions leading to their condensation and subsequent precipitation. This technique was later called ''bottom-up,'' to indicate its fundamental difference from mechanical grinding, and was applied mostly to metal oxides, sulfides, and noble metals. As the theory of magnetism and the discovery of quantum confinement effect ignited a new wave of interest to nanocrystalline inorganic materials, the third approach to synthesis, based on the vapor condensation, was developed.The simplicity of the grinding method may be considered an advantage, but it can be used only (a) for metal oxides because most metals are malleable and (b) for those areas of application, where particle morphology and phase purity are unimportant. The vapor phase condensation methods are superior in terms of phase purity; they also have an advantage when multilayer composites are to be prepared, but they are not competitive in the scaled preparations and when uniform particle morphology is necessary.