Core-shell structured magnetic Fe3O4@glutathione composite nanoparticles were synthesized and examined using diverse methods including Fourier-transform infrared spectroscopy, X-ray diffraction, energy-dispersive Xray analysis, transmission electron microscope, thermogravimetric analysis, and vibrating sample magnetometer analysis. In addition, the nonlinear optical measurements were performed by both open and closed aperture zscan methods using an aqueous colloidal solution of the fabricated nanoparticles. The colloidal system exhibited a positive nonlinear refractive index because of the self-focusing effect arising from optical re-orientation. Although optical re-orientation is a rare phenomenon in nanocolloids, high polarizability of the enveloping organic ligands caused optical re-orientation of the composite nanoparticles in the electrical field direction of the incident beam. Finally, the effect of external voltage on the nonlinear optical index was further investigated.