Iron oxide nanoparticles are the most widely used T2/T2* contrast agents and for biomedical research purposes, one of the main applications is the in vitro labeling of stem or therapeutic cells, allowing them to be subsequently tracked in vivo upon transplantation. To allow this, the nanoparticles used should not show any sign of cytotoxicity and not affect cellular physiology as this could impede normal cell functionality in vivo or lead to undesired side-effects. Assessing the biocompatibility of the nanoparticles has proven to be quite a difficult task. In the present work, a small overview of commonly used assays is presented in order to assess several aspects, such as cell viability, induction of reactive oxygen species, nanoparticle uptake, cellular morphology, cellular proliferation, actin cytoskeleton architecture and differentiation of stem cells. The main focus is on comparing the advantages and disadvantages of the different assays, highlighting several common problems and presenting possible solutions to these problems as well as pointing out the high importance of the relationship between intracellular nanoparticle concentration and cytotoxicity. Copyright © 2009 John Wiley & Sons, Ltd.