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Graphical abstract Highlights • SPIONs functionalized with PEG and rhodamine with oligodendrocytes. • Dose effect and a maximum SPIONs loading on cells. • No toxicological and morphological influence. • No oxidative stress and inflammatory response. • Cells marked with SPIONs can be magnetically separated. Abstract Iron oxide nanoparticles have the capability to cross Blood Brain Barrier (BBB) and hence are widely investigated for biomedical operations in the central nervous system. Before being used for the biomedical purpose, it is necessary to investigate its biocompatibility, dosimetry and biological interaction. In the present study, in-house synthesized superparamagnetic iron oxide nanoparticles (SPIONs) were functionalized using the polymer, PolyEthylene Glycol (PEG) and a fluorophore (Rhodamine). The interaction of these nanoparticles with murine oligodendrocytes 158N was studied using different assays. The nanoparticles were taken up by the cells via endocytosis and there was a dose-dependent increase in the intracellular iron content as revealed by flow cytometry, transmission electron microscopy and confocal microscopy. Nanoparticles remained stable inside cells even after 24 h. Cell sorting capacity using a magnet depended on the number of particles interact per cell. SPIONs exhibited good biocompatibility as no toxicological responses, including morphological changes, loss of viability, oxidative stress or inflammatory response (IL-1β, IL-6 secretion) were observed. Together, these data show that the in-house synthesized SPIONs have no side effects on 158N cells, and constitute interesting tools for biomedical applications across brain, including cellular imaging and targeting. [ABSTRACT FROM AUTHOR]