In this study, oil-based magnetic Fe3O4 nanoparticles were first synthesized by a coprecipitation method followed by a surface modification using lauric acid. Polystyrene/Fe3O4 composite particles were then prepared via miniemulsion polymerization method using styrene as monomer, 2,2'-azobisisobutyronitrile (AIBN) as initiator, sodium dodecyl sulfate (SDS) as surfactant, hexadecane (HD) or sorbitan monolaurate (Span20 (R)) as costabilizer in the presence of Fe3O4 nanoparticles. The effects of Fe3O4 content, costabilizer, homogenization energy during ultrasonication, and surfactant concentration on the polymerization kinetics (e.g., conversion), nucleation mechanism, and morphology (e.g., size distributions of droplets and latex) of composite particles were investigated. The results showed that at high homogenization energy, an optimum amount of SDS and hydrophobic costabilizer was needed to obtain composite particles nucleated predominately by droplet nucleation mechanism. The morphology of the composite particles can be well controlled by the homogenization energy and the hydrophobicity of the costabilizer. The magnetic composite particles can be made by locating Fe3O4 inside the latex particles or forming a shell layer on their PS core surface depending on the aforementioned polymerization conditions. (C) 2009 Wiley Periodicals, Inc. J Appl Polym Sci 112: 975-984, 2009