Monodisperse FeAu nanoparticles can be synthesized via the reduction of gold acetate by 1,2-hexadecanediol and the thermal decomposition of iron pentacarbonyl in the presence of the stabilizers oleic acid and oleylamine. The effects of composition, reaction time, and reaction temperature on their size, structure, and optical and magnetic properties are studied. It is found that the incorporation of Au into Fe nanoparticles leads to a structural change from body-centered cubic (bcc) to face-centered cubic (fcc). The size of the particles decreases with increasing reaction time and temperature because of atom rearrangement, and varies with the Au/Fe molar ratio as a result of the faster reduction rate of gold acetate compared with the decomposition rate of iron pentacarbonyl and the associated changes in nucleation and growth processes. The resultant FeAu nanoparticles possess the optical properties of An nanoparticles and the magnetic properties of Fe nanoparticles. Their characteristic absorption bands, in the visible light range, become broader with decreasing Au/Fe molar ratio or increasing reaction time and temperature. Also, they are red-shifted with decreasing the Au content and blue-shifted with increasing reaction time. In addition, the particles are nearly superparamagnetic. With the increase in the Au/Fe molar ratio, their blocking temperature and coercivity increase while the saturation magnetization and remnant magnetization decrease. They can be self-assembled into parallel stripes in the direction of an applied magnetic field.