A stable and biocompatible targeting complex CFNs@PEG-FA is developed. The initially synthesized cobalt ferrite nanoparticles (CFNs) were treated with poly(ethylene glycol) (PEG) in order to improve biocompatibility of the CFNs. Citric acid (CA) was used as the coupling agent, which made PEG to bond with the CFNs. CFNs@PEG were conjugated with folic acid (FA) to synthesize CFNs@PEG-FA, which was capable of targeting the FA receptor positive (FAR+) cancer cells. Synthesized nanoparticles were physically and chemically analyzed using EDX, FT-IR, XRD, TGA, FESEM, TEM, DLS, and VSM. The biocompatibility of CFNs@PEG-FA was assessed in vitro on HSF 1184 (human skin fibroblast cells) and HeLa (human cervical cancer cell, FAR+) using MTT assay and AO/EB staining florescence method. High level of CFNs@PEG-FA binding to HeLa was confirmed through quantitative and qualitative in vitro targeting studies. Results show that CFNs@PEG-FA can be a potential biomaterial for use in biomedical trials, especially magnetic hyperthermia. The findings through this in vitro study are to be compared in future with those of in vivo studies.