Paramagnetic ultrasmall Ho₂O₃ and Tm₂O₃ nanoparticles (d_avg = ∼2.1 nm) grafted with various hydrophilic and biocompatible ligands such as poly(ethylene glycol) diacid (M_n = 250 and 600 amu) and polyacrylic acid (M_w = 1800 amu) were synthesized via a one-pot polyol method. Appreciable transverse (r₂) and negligible longitudinal (r₁) water proton spin relaxivity values were observed for all nanoparticle samples. The r₂ values increased with increasing nanoparticle magnetic moment and decreased with increasing ligand size. Owing to the aforementioned r₁ and r₂ values, the nanoparticle samples exhibited appreciable negative contrast enhancements in in vivo T₂ magnetic resonance (MR) images at a 3.0 T MR field after intravenous injection, demonstrating their potential as efficient T₂ MRI contrast agents.