The effect of a polymeric medium on the nucleation and growth kinetics of iron oxide (gamma-Fe2O3) clusters is studied. We show that the kinetics in both poly(methyl methacrylate) and polystyrene are dominated by the nucleation stage, while the growth stage is largely suppressed. The rate constant is found to decrease with temperature. Most surprisingly, particles formed in a strongly adsorbing polymer, poly(methyl methacrylate), are shown to grow more slowly than those in a weakly interacting polymer, polystyrene. The kinetic mechanism is used to explain why the size distribution of nanoclusters formed in polymeric media is narrow when compared to particles synthesized in small molecule solvents.