The objective of this work was the preparation of nanoparticles for intratumoral administration.Important characteristic was dual functionality of these nanoparticles that they can be used for diagnosis andtherapy so the resulting nanoparticles will serve as theranostic agents. For this purpose iron oxide was chosen asa contrast agent to be used in Magnetic resonance imaging (MRI) for diagnosis of cancerous cells. Iron oxidenanoparticles (IONPs) were prepared in aqueous and organic medium. A multiple emulsion evaporation methodwas designed for the encapsulation of active ingredient (hydrophilic drug i-e Stilbene) and the IONPs. All theparameters affecting the colloidal properties final hybrid particles were studied and characterization was done forfinal particles. Then prepared particles were evaluated for in vitro MRI and also compared with commerciallyavailable products such as gadolinium (Gd). At same time, the minimum detectable quantity of iron oxide in vivowas determined using a commercialized iron oxide emulsion on rat models. Finally an anticancer agent wasencapsulated with IONPs using same multiple emulsion method and characterization was done.