Maghemite nanoparticles (gamma-Fe2O3) are prepared by co-precipitation method. To obtain bio-functionalized magnetic nanoparticles for magnetically controlled drug delivery, the prepared nanoparticles are successfully coated with pepsin, a bio-compatible polymer and digestive enzyme. Crystallographic phase of the nanoparticles is confirmed by X-ray diffractograms (XRD), high resolution transmission electron microscopy (HRTEM) and Fe-57 Mossbauer spectrometry. The average size of nanoparticles/nanocrystallites is estimated from the (311) peak of the XRD pattern using Debye-Scherrer formula. Results of HRTEM of coated and bare samples are in good agreement with those extracted from the XRD analysis. The dynamic magnetic properties are observed and different quantities viz., coercive field, magnetization, remanence, hysteresis losses etc., are estimated, which confirmed the presence of superparamagnetic relaxation of nanoparticles. Mossbauer spectra of the samples recorded at both 300 and 77K, confirmed that the majority of particles are maghemite together with a very small fraction of magnetite nanoparticles. (C) 2015 Elsevier Ltd. All rights reserved.