Perfluorinated ligand-passivated Fe3O4 nanocrystals were prepared through a biphasic ligand exchange method. It was found that dissolved oxygen in the reaction media predominantly determined the degree of ligand exchange and the resultant dispersion property of nanocrystals in a fluorous solvent. X-ray photoelectron spectroscopic analyses revealed that dissolved oxygen molecules bind to the surface iron species of nanocrystals in competition with the carboxylate moiety of ligands during the exchange reaction, lowering the degree of ligand exchange and colloidal stability significantly. Reducing the oxygen content of the fluorous phase by N-2 bubbling was found to result in a highly stable dispersion of phase-transferred Fe3O4 nanocrystals with a single-particle size distribution maintained for a few months.