Composites of α-Fe and Fe3O4 having dimensions in the range 10-20nm have been prepared by subjecting micrometer-sized α-Fe2O3 powders to a reduction treatment in hydrogen at a temperature 683K for a duration from 5 to 40min. The specimens have been characterized by Mossbauer spectroscopy. The latter shows the presence of a substantial amount of superparamagnetic particles. The fraction of these particles increases as the reduction treatment is enhanced. The incorporation of hydrogen atoms during the reduction process appears to break down the precursor oxide particles. Magnetic susceptibility shows a maximum at around 125K which arises due to Verwey transition in Fe3O4 particles. Magnetization measurements on zero-field cooled and field cooled specimens indicate a blocking temperature close to 300K. Coercivity variation with temperature shows an unusual behaviour. Exchange coupling between the ferro- and ferri-magnetic particles seems to be the reason behind this. The presence of such nearest neighbouring pairs of α-Fe/Fe3O4 is confirmed by the DC resistivity data which show electron tunnelling between metal islands separated by Fe3O4 granules. © 2002 Elsevier Science B.V. All rights reserved.