Ultrasmall iron oxide nanoparticles (USIO NPs) with a size <5 nm are a class of emerging nanomaterials. As a result of their intrinsic drawbacks related to poor colloidal stability, low r1 relaxivity, and lack of functionality, various strategies have been adopted to synthesize USIO NPs with controllable sizes, to surface modify the particles with polymers, and to assemble them in combination with other nanoscale platforms. Here, we review recent progresses in the synthesis, surface modification, and self-assembly of USIO NPs to address key issues in their biomedical application in the field of cancer diagnosis and therapy, in particular magnetic resonance (MR) imaging, dual-modal or multimodal imaging, drug delivery, and theranostics.