A composite of polyaniline (PANI) with both conducting and ferromagnetic functions was synthesized by a chemical method proposed by the authors. For the electrical properties, its room-temperature conductivity was measured to be about 10(-1) S/cm when doped with 1.0M HCl, and it is independent of the preparation conditions, such as reaction temperature and concentration of FeSO4 solution. Temperature dependence of the conductivity of the composites at temperature between 77 and 450 K is controlled by thermal activation and dedoping processes, which result in the decrease of conductivity with increase of temperature as T > 320 K. For their magnetic properties, unusual ferromagnetic properties with high saturated magnetization (M-s) and lower coercive force (H-c = 0) were observed. An effect of the preparation conditions on the ferromagnetic properties of composites was observed. The higher the reaction temperature and the concentration of FeSO4 solution, the higher the saturated magnetization was observed. No hysteresis feature (i.e. H-c = 0) for any PANI composites synthesized in this paper was observed, and this is independent of the preparation conditions. This may be attributed to the nanometer size of the magnetic particles existing in composites. Thus, it suggests that the doping of PANI leads to electrical properties of composites, whereas the nanocrystalline magnetic particles (Fe3O4) are responsible for the observed ferromagnetic properties of PANI composites.