Cysteine capped magnetite nanoparticles (10 to 20 nm) were synthesized via coprecipitation method under ultrasonic irradiation. The influence of pH value of the solution and cysteine addition on the size distribution and hydrodynamic size of nanoparticles were studied via TEM and PCS methods, respectively. The crystal structure and magnetic properties of the nanoparticles were characterized by XRD and VSM techniques, respectively. Coating density was calculated using TGA and TEM results. Cytotoxicity assessment performed by incubation of L929 cells, confirmed that ferrofluids are biocompatible. MRI studies conducted on rats demonstrated suitability of synthesized nanoparticles as contrast agents, especially for imaging of the lymph nodes.