This paper describes the synthesis and surface engineering of core/shell-type iron/iron oxide nanoparticles for magnetic hyperthermia cancer therapy. Iron/iron oxide nanoparticles were synthesized from microemulsions of NaBH(4) and FeCl(3), followed by surface modification in which a thin hydrophobic hexamethyldisilazane layer - used to protect the iron core - replaced the CTAB coating on the particles. Phosphatidylcholine was then assembled on the nanoparticle surface. The resulting nanocomposite particles have a biocompatible surface and show good stability in both air and aqueous solution. Compared to iron oxide nanoparticles, the nanocomposites show much better heating in an alternating magnetic field. They are good candidates for both hyperthermia and magnetic resonance imaging applications.