Aqueous magnetic fluids were synthesized by a sequential process involving the chemical coprecipitation of Fe(II) and Fe(III) salts with ammonium hydroxide (NH4OH) followed by resuspension of the ultrafine particles in water using fatty acids. This procedure produced Fe3O4 nanoparticles stabilized against agglomeration by bilayers of n-alkanoic acids with 9-13 carbons encapsulating the metal particles. The magnetic properties and particle size and size distributions of these magnetic fluids, characterized by transmission electron microscopy and superconducting quantum interference device, indicated the formation of single-domain nanoparticles of mean diameter similar to 9.3 and similar to 7.5 nm, respectively; the difference in values determined by the two methods implies the presence of a nonmagnetic layer on the particle surface. Thermogravimetric analysis measurements showed the existence of two distinct populations of surfactants on the particle surface, each having surfactant coverage of similar to 21-24 Angstrom(2)/molecule, that was consistent with highly organized surfactant bilayer structures. Differential scanning calorimetry indicated the presence of a phase transition for the bilayer-coated particles that suggests partial interpenetration of the hydrocarbon tails of the primary and secondary surfactants.