Iron oxide nanoparticles are widely used for magnetic resonance imaging, and there is a rapidly expanding research interest in using these nanoparticles for drug delivery or cell labeling. Therefore we need a better understanding of the properties of the nanoparticles, if they are endocytosed and degraded without being toxic to cells. In this thesis the characteristics of commercially available iron oxide nanoparticles were investigated. The nanoparticles degradability was investigated under various conditions, and the results show that the particles are degraded after incubation in citrate buffer with low pH in the absence of enzymes and that the degradation rate is pH dependent. The nanoparticles were also found to be internalized and accumulated in epithelial and endothelial cells, and partly colocalizing with lysosomes. There were no signs of any immediate toxic effects on cells after endocytosis. These results indicate that the nanoparticles can be used for labeling and tracking of cells.