Surface functionalization of iron oxide nanoparticles (Fe₂O₃ NPs) with antibiotics is a novel approach that opens the door to drug delivery applications. In the present work, we report iron oxide nanoparticles synthesized by chemical co-precipitation method. As-synthesized nanoparticles were characterized using field emission scanning electron microscopy (FESEM) , energy dispersive X-ray (EDX), X-ray diffraction (XRD), ultraviolet (UV)–visible (Vis) spectroscopy, Fourier transform infrared (FTIR), and vibrating sample magnetometer (VSM). The poly-shaped Fe₂O₃ NPs of size (34 ± 10) nm with hematite (α-Fe₂O₃) phase were synthesized. The antibacterial activity of chloramphenicol and gentamicin and their formulation with encapsulated iron oxide nanoparticles was investigated by the agar well diffusion technique. Drug-encapsulated Fe₂O₃ NPs showed antibacterial activity against Escherichia coli and Staphylococcus aureus strains, possibly in a dose-dependent manner. Significant effectiveness was confirmed by the increase in the single range of inhibition against the tested microorganisms. Furthermore, the effect of iron oxide nanoparticle concentrations ranging from 1 to 9 μg/μL on bacterial growth was examined.