Au-coated magnetic Fe nanoparticles have been successfully synthesized by partial replacement reaction in a polar aprotic solvent with about 11 nm core of Fe and about 2.5 nm shell of Au. In this work, a combination of TEM (transmission electron microscopy), XRD (X-ray powder diffractometry), EDS (energy disperse X-ray spectroscopy), SQUID (superconducting quantum interference device), TGA (thermograviometric analysis) and UV–visible absorption spectroscopy were employed to characterize the morphology, structure, composition and magnetic properties of the products. HRTEM images show clear core–shell structure with different crystal lattices from Fe and Au. SQUID magnetometry reveals that particle magnetic properties are not significantly affected by the overlayer of a moderately thick Au shell. The Au-coated particles exhibit a surface plasmon resonance peak that red-shifts from 520 to 680 nm. And all the above characterizations show that in this sample there are no iron oxides inside the particle.