Multifunctional iron oxide (FeOx) magnetic nanoparticles (MNPs) are promising items for biomedical applications. They are studied as theranostic agents for cancer treatment, selective probes for bioanalytical assays, controllable carriers for drug delivery and biocompatible tools for cell sorting or tissue repair. Here we report a new method for the synthesis in water of FeOx-MNPs via a top-down physical technique consisting in Laser Ablation Synthesis in Solution (LASiS). LASiS is a green method that does not require chemicals or stabilizers, because nanoparticles are directly obtained in water as a stable colloidal system. A gamut of characterization techniques was used for investigating the structure of FeOx-MNPs that have a polycrystalline structure prevalently composed of magnetite (ca. 75%) and hematite (ca. 22%). The FeOx-MNPs exhibit very good magnetic properties if compared to what is usually reported for iron oxide nanoparticles, with saturation magnetization close to the bulk value (ca. 80 emu g(-1)) and typical signatures of the coexistence of ferrimagnetic and antiferromagnetic phases in the same particle. The functionalization of FeOx-MNPs after the synthesis was possible with a variety of ligands. In particular, we succeeded in the functionalization of FeOx-MNPs with carboxylated phosphonates, fluorescent alkylamines, fluorescent isothiocyanates and bovine serum albumin. Our FeOx-MNPs showed excellent biocompatibility. Multifunctional FeOx-MNPs were exploited for macrophage cell labelling with fluorescent probes as well as for cell sorting and manipulation by external magnetic fields.