The geometrical, electronic, and magnetic properties of small Cu n Fe (n=1–12) clusters have been investigated by using density functional method B3LYP and LanL2DZ basis set. The structural search reveals that Fe atoms in low-energy Cu n Fe isomers tend to occupy the position with the maximum coordination number. The ground state Cu n Fe clusters possess planar structure for n=2–5 and three-dimensional (3D) structure for n=6–12. The electronic properties of Cu n Fe clusters are analyzed through the averaged binding energy, the second-order energy difference and HOMO–LUMO energy gap. It is found that the magic numbers of stability are 1, 3, 7 and 9 for the ground state Cu n Fe clusters. The energy gap of Fe-encapsulated cage clusters is smaller than that of other configurations. The Cu 5 Fe and Cu 7 Fe clusters have a very large energy gap (>2.4eV). The vertical ionization potential (VIP), electron affinity (EA) and photoelectron spectra are also calculated and simulated theoretically for all the ground-state clusters. The magnetic moment analyses for the ground-state Cu n Fe clusters show that Fe atom can enhance the magnetic moment of the host cluster and carries most of the total magnetic moment.