A new strategy for water-dispersibility of hydrophobic carbide nanostructures was proposed. In this regard, hydrophobic Fe5C2 nanoparticles (NPs) with size ranging 25–40 nm were synthesized and coated with 12–15 nm silica shell for biomedical applications. X-ray diffraction (XRD) results revealed that Fe5C2 NPs with monoclinic structure were successfully prepared. The crystalline structure of Fe5C2 NPs was remained unchanged and saturation magnetization of core remained nearly constant after coating with silica shell. Moreover, Raman spectroscopy identified D-band of amorphous carbon shells which was also confirmed by transmission electron microscopy (TEM). Finally, Fe5C2@SiO2 core@shell NPs demonstrated no significant cytotoxicity and appropriate heat generating which makes them a promising candidate for magnetic fluid hyperthermia applications.