Novel α‐difluoromethylenephosphonate, ω‐hydroxyl‐terminated poly(ε‐caprolactone)s (pCF2‐PCL‐OH) were successfully prepared for the first time by ring‐opening polymerization of ε‐caprolactone in the presence of diisopropyl (1,1‐difluoro‐5‐hydroxypentyl)phosphonate (pCF2OH) as the initiator and 1,5,7‐triazabicyclo[4.4.0]dec‐5‐ene (TBD) as the catalyst. The so‐obtained pCF2‐PCL‐OHs were thoroughly characterized by 1H NMR, 13C NMR, 31P NMR spectroscopies, SEC, and MALDI‐TOF mass spectrometry. Dealkylation of the phosphonate ester‐functionalized polymers was performed using trimethylsilyl bromide to afford the corresponding difluorophosphonic acid‐terminated PCL analogues. They were used for coating magnetite nanoparticles to afford composite iron oxide nanoparticles with a mean diameter <20 nm as measured by TEM.