The aim of the research work is to produce iron oxide nanoparticles (NPs) and modify their surface to reduce their toxicity. The iron oxide NPs were synthesized using the chemical co-precipitation process, and studied the UV-Vis, SEM, XRD, DLS, Zeta analyzer and FTIR spectroscopes. Bacillus subtilis and Escherichia coli were used as test organisms for assessing the harmfulness of iron oxide NPs and amended iron oxide NPs. It was concluded that iron oxide NPs have harmfulness towards these test organisms at higher concentrations, whereas amended iron oxide NPs do not have this property. The research supports the idea that surface redesign with biocompatible substances like chitosan can reduce the toxicity of NPs.