We have developed a facile method for preparing magnetic nanoparticles which couple strongly with a liquid crystal (LC) matrix, with the aim of preparing ferronematic liquid crystal colloids for use in magneto-optical devices. Magnetite nanoparticles were prepared by oxidising colloidal Fe(OH)(2) with air in aqueous media, and were then subject to alkaline hydrothermal treatment with 10 mol dm(-3) NaOH at 100 degrees C, transforming them into a polydisperse set of domain magnetite nanorods with maximal length similar to 500 nm and typical diameter similar to 20 nm. The nanorods were coated with 4-n-octyloxybiphenyl-4-carboxylic acid (OBPh) and suspended in nematic liquid crystal E7. As compared to the conventional oleic acid coating, this coating stabilizes LC-magnetic nanorod suspensions. The suspension acts as a ferronematic system, using the colloidal particles as intermediaries to amplify magnetic field-LC director interactions. The effective Frederiks magnetic threshold field of the magnetite nanorod-liquid crystal composite is reduced by 20% as compared to the undoped liquid crystal. In contrast with some previous work in this field, the magneto-optical effects are reproducible on time scales of months. Prospects for magnetically switched liquid crystal devices using these materials are good, but a method is required to synthesize single magnetic domain nanorods. (c) 2012 Elsevier Inc. All rights reserved.