Ferrous sulfate is the most commonly used drug for treatment of iron deficiency anemia, but it is badly absorbed and causes many unfavorable side effects. Nanotechnology is a way to decrease the side effects of drugs and to increase the drug bioavailability. So, this study is designed to investigate the effect of iron oxide nanoparticles in comparison to ferrous sulphate in the treatment of iron deficiency anemia in rats. Forty male albino rats were divided into two main groups: Control group (10 rats) and anemic group (30 rats) that received standard iron free basal diet for six weeks. Then the anemic group was subdivided into three groups (10 rats) in each group: anemic control group, ferrous sulfate group (received ferrous sulfate 0.4 mg/kg b.w/ 10 days) and iron oxide nanoparticles group (received iron oxide nanoparticles 0.4 mg/kg b.w/ 10 days) in the drinking water. Iron oxide nanoparticlescaused a significant increase in the level of red blood cells (8.80±0.05 106/μL), hemoglobin (18.46±0.33 g/dL), hematocrit (46.66±0.23 %), mean corpuscular volume (MCV) (53.02±0.3 FL), mean corpuscular hemoglobin concentration (MCHC) (39.56±0.6 %), ferritin (447.6±9.02 μg/L), transferrin saturation (138.0±1.5), total iron binding capacity (TIBC) (145.00±1.15 mg/dL) and serum iron (276.33±2.07 mg/dL). Moreover, it decreased serum malondialdehyde (MDA) (31.85±0.34 nmol/g) and C-reactive protein (CRP) (312.66±1.7 mg/L) when compared to ferrous sulfate group and anemia control groups. These results revealed that iron oxide nanoparticles proved as an effective drug for the treatment of iron deficiency anemia in rats.