Au-coated Fe nanoparticles have been prepared by using a reverse micelle method through reduction of an aqueous solution. Characterizations have been carried out over time to probe the oxidation of Fe. Immediately after synthesis, the samples exhibit metallic conduction and a negative magnetoresistance, consistent with the presence of alpha-Fe. The temperature dependence of magnetization displays a maximum at a blocking temperature of around 150 K. After a period of 1 month, the samples exhibit insulating behavior, indicating the oxidation of the Fe core. Mossbauer spectroscopy indicates the presence of an alpha-Fe component and a broad distribution of local environments. (C) 2004 American Institute of Physics.