Iron(III) species dispersed in silica have been synthesized with a sol-gel process. The iron(III) was introduced as the acetylacetonate complex into a solution of tetraethoxysilane to yield, after evaporative drying, pellets or monoliths. Two gels were dried very slowly over a period of five months in order to prepare a defect free monolith useful for nonlinear optical studies. Z-scan experimental studies on the resulting, transparent, monolithic, doped solid revealed an optical Kerr effect, a third order nonlinear optical phenomenon showing a linear dependence of the refractive index on the irradiance with a nonlinear refractive index, n(2), of -1.95 x 10(-11) cm(2)/W. Magnetic susceptibility studies between 4.2 and 295 K revealed paramagnetic behavior with a Curie constant of 4.433 (emu/mol)K and a Weiss temperature of -7.1 K. Magnetization studies at 5 K and at applied fields of up to 4 T and Mossbauer spectral studies between 4.2 and 295 K revealed a 50:50 mixture of paramagnetic species and nanoparticles with an average particle radius of 1.3 +/- 0.2 nm. A blocking temperature of 70 K and a magnetic anisotropy energy of 2.4 x 10(5) J/m(3) stop are derived from the Mossbauer spectra. (c) 2006 Springer Science + Business Media, Inc.