Cerium oxide nanoparticles were synthesized by thermal decomposition of cerium alginate biopolymer gel at 450 degrees C, where alginate both acts as a precursor and a template. The synthesis is a green, facile and one-step method and the resulting nanoparticles have functionalized surface. The resulted material were characterized using X-ray diffraction for confirmation of cerium oxide, crystallite size analysis and grain size distribution. Transmission electron microscopy was used for the particle size determination, hydrodynamic size estimation was studied by dynamic light scattering and surface characteristics were analyzed using zeta potential measurements. Results show the presence of spherical particles with a size of < 5 nm. Having only a negative surface charge in such a wide pH range will ensure that the behavior of obtained nanoparticles in different environments is predictable. Isoelectric point of the synthesized material is significantly different from non-functionalized cerium oxide, and indicates the surface functionality, which is an important property for biocompatibility.