In this paper we report synthesis and characterization of composite polymeric particles bearing magnetite inclusions and reactive diketone groups on the surface. Composites were prepared by two-step method in which first step requires preparation of the functionalized polystyrene core and during second step magnetite was deposited onto core particle surface. This procedure gives a possibility to obtain composite particles with core-shell morphology and both the core size and magnetite shell thickness can be varied. Highly monodisperse PS/AAEM microspheres were synthesized by surfactant-free emulsion polymerization. Change of monomer fleet-ratio gives a possibility to change effectively the final particle size of dispersions without strong changes in particle size distribution. PS/AAEM particles were characterized by light scattering techniques (DLS, SLS) and electron microscopy (SEM) with respect to their particle size and morphology of the surface layer. Magnetite was deposited in form of nano-crystals onto PS-AAEM particle surface by heterocoagulation process. It has been established that more uniform magnetite coating was obtained at lower base amounts used for synthesis of magnetite. Amount of the magnetite on the polymeric particle surface can be effectively controlled by changing the initial FeCl2 and FeCl3 concentrations and/or variation of the PS/AAEM core dimensions. It has been confirmed by separation centrifugation technique, that stepwise increase of the magnetite content on the particle surface decrease gradually the stability of colloidal system. Magnetization curves for composite particles indicate that deposited magnetite content is high enough to achieve considerable magnetic response to external magnetic field. (C) 2004 Elsevier Ltd. All rights reserved.