The precipitation of Fe3O4 from an aqueous solution with ammonium hydroxide produced nanoparticles that were coated with a layer of oleic acid [or, in some cases, poly(ethylene oxide) or poly(vinylpyrrolidone)] before their dispersion into the organic phase. The encapsulation of magnetite nanoparticles in poly(2-hydroxyethyl methacrylate) or poly(2-hydroxyethyl methacrylate-co-glycidyl methacrylate) microparticles was achieved by dispersion polymerization in toluene/2-methylpropan-1-ol. Magnetic poly(glycidyl methacrylate) microparticles were obtained in the presence of poly(ethylene oxide) at the magnetite/monomer interface. The particles containing up to 20 wt % iron maintained their discrete nature and did not aggregate. The effect of the reaction medium polarity, the concentrations of the monomer, initiator, and stabilizer, and the temperature on the particle size, particle size distribution, and iron and oxirane group contents was studied. (C) 2003 Wiley Periodicals, Inc.