Abstract Iron oxide nanoparticles of size ∼10 nm have been encapsulated into four nanometer thick shells of Prussian blue and were then electrophoretically deposited onto an indium tin oxide substrate. The immobilization of cholesterol oxidase has been done onto the nanostructured film to investigate the kinetic parameters and biosensing characteristics. The fabricated bioelectrode exhibits an electron transfer coefficient and a charge transfer rate constant of 0.45 and 45.15 s−1, respectively. Direct electron transfer properties of the nanostructured film result in 3rd generation cholesterol biosensor. The bioelectrode exhibits high sensitivity (2.15 mAM−1 cm−2), a low Kmapp value (0.07 mM), good stability and high selectivity towards cholesterol.