Superparamagnetic iron oxide (SPIO) nanoparticles have the potential for use as a multimodal cancer therapy agent due to their ability to carry anticancer drugs and generate localized heat when exposed to an alternating magnetic field, resulting in combined chemotherapy and hyperthermia. To explore this potential, we synthesized SPIOs with a phospholipid-polyethylene glycol (PEG) coating, and loaded Doxorubicin (DOX) with a 30.8% w/w loading capacity when the PEG length is optimized. We found that DOX-loaded SPIOs exhibited a sustained DOX release over 72 hours where the release kinetics could be altered by the PEG length. In contrast, the heating efficiency of the SPIOs showed minimal change with the PEG length. With a core size of 14 nm, the SPIOs could generate sufficient heat to raise the local temperature to 43 °C, sufficient to trigger apoptosis in cancer cells. Further, we found that DOX-loaded SPIOs resulted in cell death comparable to free DOX, and that the combined effect of DOX and SPIO-induced hyperthermia enhanced cancer cell death in vitro. This study demonstrates the potential of using phospholipid-PEG coated SPIOs for chemotherapy–hyperthermia combinatorial cancer treatment with increased efficacy.