A lot of attention has been given to incorporation of nano-sized oxides including Fe2O3 in ammonium perchlorate (NH4ClO4, AP)-based solid propellants to enhance their final performance. In the present work, spherical nano-Fe2O3/AP composites were successfully produced by crystallization/agglomeration of AP combined with reactive crystallization of nano-Fe2O3. The synthesized nano Fe2O3 particles were confirmed to be hematite by XRD, FTIR and Raman. The SEM image showed that the nano Fe2O3 particles with an average size of 46 nm are deposited on the surface of AP. The catalytic effect of nano Fe2O3 particles on the thermal decomposition of AP may be explained by TGA data: a majority of the nano Fe2O3/AP composites are completely decomposed at lower temperature and their decomposition rate of AP is shown to be remarkably enhanced. Furthermore, the activation energy indicates that the existence of nano-Fe2O3 particles is able to reduce the energy barrier associated with an autocatalytic reaction from 130.3 to 86.7 kJ/ mol, which ultimately leads to a decrease in the onset temperature of decomposition of AP.