Chitosan is the deacetylated form of chitin and used in numerous applications. Because it is a good dispersant for metal and/or oxide nanoparticle synthesis, chitosan and its derivatives have been utilized as coating agents for magnetic nanoparticles synthesis, including superparamagnetic iron oxide nanoparticles (SPIONs). Herein, we demonstrate the water-soluble SPIONs encapsulated with a hybrid polymer composed of polyelectrolyte complexes (PECs) from chitosan, the positively charged polymer, and dextran sulfate, the negatively charged polymer. The as-prepared hybrid ferrofluid, in which iron chloride salts (Fe³⁺ and Fe²⁺) were directly coprecipitated inside the hybrid polymeric matrices, was physic-chemically characterized. Its features include the z-average diameter of 114.3 nm, polydispersity index of 0.174, zeta potential of −41.5 mV and iron concentration of 8.44 mg Fe/mL. Moreover, based on the polymer chain persistence lengths, the anionic surface of the nanoparticles as well as the high R2/R1 ratio of 13.5, we depict the morphology of SPIONs as a cluster because chitosan chains are chemisorbed onto the anionic magnetite surfaces by tangling of the dextran sulfate. Finally, the cellular uptake and biocompatibility assays indicate that the hybrid polymer encapsulating the SPIONs exhibited great potential as a magnetic resonance imaging T2 contrast agent for cell tracking.