Air-stable Fe/Fe3C nanocrystalline particles have been prepared by sonicating Fe(CO)(5) in diphenylmethane solutions under argon and subsequently annealing the amorphous as-prepared product in an inert atmosphere. Changing the sonication conditions and annealing temperature allows control of the size of the particles, as well as their composition and magnetic properties. Material obtained under appropriate conditions possesses a high saturation magnetization close to that of bulk iron (M-s/M-o= 0.97-1.06) and good, soft magnetic properties (H-C = 0.50-0.05 A m(-1)). Nanocrystalline particles have a core-shell structure where a coating of Fe3C and carbon protects the body-centered cubic Fe in the core from oxidation.