Conventional early-stage breast cancer treatments such as surgery, chemotherapy and external radiotherapy despite their proven short-term efficacy tend to have adverse long-term physiological and psychological implications on the patients. This is primarily due to their inability to spare healthy tissue surrounding the tumor. Use of radioactive palladium (103Pd) seeds for producing localized effect with brachytherapy is already in practice. However, they are known to result in uneven dose distribution with creation of "hot spots" in the vicinity of seed implants. Alternatively, conventional thermal ablation or hyperthermia treatments using mechanical or electromagnetic systems also have difficulties with localizing the thermal effect to the target region. Composite and biocompatible palladium- (Ultra-small) superparamagnetic iron oxide nanoparticles (PdO-USPION) on the other hand have the potential to diffuse throughout the tumor ensuring relatively more uniform dose distribution and improve the ease of clearance from the biological system without causing long-term side effects. Magnetic property of (Ultra small) superparamagnetic iron oxide nanoparticles can be exploited to induce and deliver heat energy to kill cancerous cells upon exposure to Alternating magnetic field (AMF) and generate contrast enhanced magnetic resonance images (MRI) by subjecting them to static magnetic fields. Heating and contrast enhancement ability depends on the physical, chemical and magnetic properties of nanoparticles which in turn rely on the synthesis method. In this research, spark ablation technology is employed to produce the nanoparticles from metallic electrodes. Although, for the purpose of the current research, inactive palladium is used to reduce complexity given that the synthesis of PdO-USPIONs with this synthesis method is employed for the first time through this research. Inter-metallic Pd-Fe are generated in the spark discharge system and captured in an aqueous media resulting in (oxidized intermetallic palladium ultra-small superparamagnetic iron oxide nanoaparticles) PdO-USPIONs. Since the synthesis method is relatively new, major component of the research deals with investigating the influence of system parameters on production of nanoparticles. Characterization results associated with USPIONs and PdO-USPIONs are thoroughly analyzed to optimize the setup to generate tunable PdO-USPIONs and to evaluate their performance as thermal and contrast agents. Use of citric acid as surfactant to lower agglomeration resulting in improved T1 relaxation behavior is also studied.