A considerable increase in the saturation magnetization, Ms (40%), and initial susceptibility of ultrasmall (<5 nm) iron oxide nanoparticles prepared by laser pyrolysis was obtained through an optimized acid treatment. Moreover, a significant enhancement in the colloidal properties, such as smaller aggregate sizes in aqueous media and increased surface charge densities, was found after this chemical protocol. The results are consistent with a reduction in nanoparticle surface disorder induced by a dissolution recrystallization mechanism.