Poly- and nearly monocrystalline hematite particles having diameters of around 2 and 0.1 mu m, respectively, were prepared by the gel-sol method and coated with a uniform silica layer by the sol-gel method. The core in the silica shell was reduced to iron without agglomerate formation between the particles by using a hydrogen stream. The microstructure and morphology of these cores and the silica layers were examined by high-resolution transmission electron microscopy, and electron and X-ray diffraction analysis. In hematite particles, around 2 mu m in diameter, the reduced products were mostly alpha-Fe, but partially magnetite. In hematite particles, around 0.1 mu m in diameter, only a-Fe was observed. Most of the raw hematite and iron particles produced were monocrystalline, and part of core grew hexagonal prism-shaped monocrystalline particles. In the case of the growth of a crystal to a hexagonal prism, a nanometer-scaled space at the interface between the iron crystal core and the silica layer was discovered.