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We have developed a novel water-dispersible oleic acid (OA)-Pluronic-coated iron oxide magnetic nanoparticle formulation that can be loaded easily with high doses of water-insoluble anticancer agents. Drug partitions into the OA shell surrounding iron oxide nanoparticles, and the Pluronic that anchors at the OA-water interface confers aqueous dispersity to the formulation. Neither the formulation components nor the drug loading affected the magnetic properties of the core iron oxide nanoparticles. Sustained release of the incorporated drug is observed over 2 weeks under in vitro conditions. The nanoparticles further demonstrated sustained intracellular drug retention relative to drug in solution and a dose-dependent antiproliferative effect in breast and prostate cancer cell lines. This nanoparticle formulation can be used as a universal drug carrier system for systemic administration of water-insoluble drugs while simultaneously allowing magnetic targeting and/or imaging.