The intrinsic magnetic properties of iron oxide (Fe3O4) have been exploited in various applications. Particularly for biomedical applications, their effectiveness is enhanced with suitable coatings on their surface. Most of the current syntheses of Fe3O4 involve the use of organic surfactants such as oleic acid and oleylamine which provide stable dispersions only in organic solvents. Stable hydrophilic nanoparticles which are critical for certain applications are only obtained after subsequent post processing reactions to exchange the hydrophobic surfactant coating. Here, we describe a one-step co-precipitation synthetic approach to obtain citric acid coated Fe3O4 nanoparticles and the functionalization of these nanoparticles with intelligent hydrogels (e.g. thermo-responsive N-isopropylacrylamide) via surface-initiated atom transfer radical polymerization (ATRP). Hydroxyl groups attached to the Fe3O4 nanoparticles after co-precipitation result in magnetic nanoparticles which are stable in aqueous systems, and further provide initiating sites for the ATRP reaction. The nanoparticles are characterized for their size using both dynamic light scattering and transmission electron microscopy. The coating is also confirmed by fourier transform infrared spectroscopy and thermo-gravimetric analysis.