This study is an attempt to produce gadolinium-doped iron oxide nanoparticles for the purpose of utilization in magnetic fluid hyperthermia (MFH). Six gadolinium-doped iron oxide samples with varying gadolinium contents ($G{d}_{x}F{e}_{3-x}{O}_4,x=0, 0.02, 0.04, 0.06, 0.08, 0.1)$ were prepared using the hydrothermal method $\mathrm{at} 180 °\mathrm{C}$ and high vapor pressure to incorporate gadolinium ions in the iron oxide structure. The samples were indexed as $Gd\mathrm{IO}/x$, with $x$ varying from 0.0 to 0.1. The results reveal that gadolinium ions have a low solubility limit in the iron oxide lattice (x = 0.04). The addition of gadolinium caused distortion in the produced maghemite phase and formation of other phases. Based on X-ray diffraction (XRD) analysis and photoelectron spectroscopy (XPS), it was observed that gadolinium mostly crystalized as gadolinium hydroxide, $Gd {\left(OH\right)}_3$ for gadolinium concentrations above the solubility limit. The measured magnetization values are consistent with the formed phases. The saturation magnetization values for all gadolinium-doped samples are lower than the undoped sample. The specific absorption rate (SAR) for the pure iron oxide samples was measured. Sample GdIO/0.04, pure iron oxide doped with gadolinium, showed the highest potential to produce heat at a frequency of 198 kHz. Therefore, the sample is considered to hold great promise as an MFH agent.