A facile surfactant-free process is introduced to prepare multifunctional polypropylene (PP) nanocomposites filled with highly dispersed Fe@Fe2O3 core@shell nanoparticles (NPs). Transmission electron microscopy (TEM) observations confirm the formation of uniform NPs in the PP matrix and the particle size increases with increasing the particle loading. The melt rheology measurements show an obvious change in the frequency dependent storage modulus (G'), loss modulus (G '') and complex viscosity (eta(center dot)) particularly at low frequencies. These changes are often related to the filler "percolation threshold", which has also been verified in the sharp change of electrical resistance and dielectric permittivity of these nanocomposites in higher particle loadings. The continuous decrease in the resistivity with increasing filler loading from 5 wt % to 20 wt % demonstrates the structural transition of the nanocomposites. The monotonic increase in the dielectric permittivity with increasing particle loadings combined with the direct evidence from the TEM observations indicate that the NPs are well separated and uniformly dispersed in the polymer matrix. Thermal gravimetric analysis (TGA) results reveal a surprisingly high enhancement of the thermal stability by similar to 120 degrees C in air due to the oxygen trapping effect of the NPs and the polymer particle interfacial interaction. The differential scanning calorimetry (DSC) results show that the crystalline temperature (T-c) of the nanocomposites is reduced by 16-18 degrees C as compared to that of PP, while the melting temperature (T-m) almost maintains the same. The nanocomposites is found to be soft ferromagnetic at room temperature.