Nanocrystalline iron powders have been prepared by the inert gas evaporation method. After preparation the material has been passivated by pure oxygen and air exposure. In the present paper we describe new characterization studies of this sample by Transmission Electron Microscopy (TEM), X-ray Diffraction (XRD), X-ray Absorption Spectroscopy (XAS), Electron Energy Loss Spectroscopy ( EELS) and Mossbauer Spectroscopy ( MS), giving a complete chemical and structural characterization of the nanocomposite material in order to correlate its microstructure with its singular magnetic behavior. This nanocomposite was later heated following different thermal treatments. It was found that the sample heated successively in high vacuum (10(-7) torr) at 383 K for 1 h and under a residual oxygen pressure of 4 x 10(-4) torr at 573 K for 3 h, results in a powder formed by nanoparticles of gamma-Fe2O3 as stated from XRD, XAS and MS. This material is stable during several years and behaves almost totally like superparamagnetic at room temperature. (C) 2004 Kluwer Academic Publishers.