Iron-carbon nanocomposites have gained interest due to their new engineering and biomedical applications. Carbon coated iron nanoparticles (Fe@C) were obtained continuously and in a single step using the laser pyrolysis method. The continuous wave CO2 laser beam was used to continuously heat a sensitized (with ethylene) precursor gas mixture, in which iron pentacarbonyl (vapor) and acetylene were the iron and carbon donors, respectively. The effect of varying the residence time in the reaction zone through the variation of the internal nozzle diameter was explored in order to improve the particle size and the phase distributions. At increased nozzle diameter, (i) the particle mean diameter increases (from about 3.5 to 10.5 nm), (ii) higher ordering of the crystallographic network seems to occur, (iii) the dominance of the alpha-Fe and iron carbide phases is revealed. Onion-like graphenic layers often cover the buried iron cores. Magnetic measurements and temperature dependent Mossbauer spectroscopy were used in order to find correlations concerning the magnetic behavior and the Fe phase composition of samples. Preliminary experiments for obtaining stable water-based magnetic nanofluids are discussed. (C) 2011 The Society of Powder Technology Japan. Published by Elsevier B.V. and The Society of Powder Technology Japan. All rights reserved.