A unique reverse micelle method has been developed to prepare gold-coated iron (Fe@Au) nanoparticles. XRD, UV/vis, TEM, and magnetic measurements are utilized to characterize the nanocomposites. XRD only gives FCC patterns of gold for the obtained nanoparticles. The absorption band of the Fe@Au colloid shifts to a longer wavelength and broadens relative to that of the pure gold colloid. TEM results show that the average size of Fe@Au nanoparticles is about 10 nm. These nanoparticles are self-assembled into chains on micron scale under a 0.5 T magnetic field. Magnetic measurements show that the particles are superparamagnetic with a blocking temperature (T B ) of 42 K. At 300 K (above T B ), no coercivity (Hc) and remanence (M r ) is observed in the magnetization curve, while at 2 K (below T B ) Hc and M r are observed to be 728 Oe and 4.12 emu/g, respectively.