We have investigated the structural and magnetic properties of a granular composite of iron particles dispersed in alumina matrix, obtained starting from an aqueous solution containing Al(NO3)(3) . 9H(2)O and FeSO4 . 7H(2)O. The samples were characterized by X-ray diffraction and fluorescence, Mossbauer spectroscopy (MS) and vibrating sample magnetometry (VSM). Samples with 7.8 wt% Fe were submitted to two different heat treatments with the aim of reducing the iron oxides into metallic iron. Series A was submitted to calcination between 100 degrees C and 1200 degrees C, followed by reduction in ultra pure H-2 at 600 degrees C during 2 h; Series B was submitted to reduction at 600 degrees C or at 1000 degrees C directly after drying at 80 degrees C. As determined by MS, we have obtained a maximum of 24% metallic Fe in series A and of 74% alpha-Fe in series B, after reduction at 1000 degrees C. By VSM, at 300 K, the maximum coercivity of 819 Oe was obtained for the samples calcinated at 800 degrees C before reduction and an almost constant saturation magnetization of 2 emu/g. In series B, samples with 74% alpha-Fe presented a coercivity of 370 Oe and a saturation magnetization of 9.0 emu/g. The applied synthesis method seems to be an interesting alternative way to obtain magnetic Fe nanoparticles in a non-magnetic alumina matrix. (C) 1998 Elsevier Science B.V. All rights reserved.