The synthesis of nanoscale zero-valent iron (NZVI) nanoclusters with dimensions ranging from 20 to 100 nm for the control of environmental pollutants has received substantial attention. However, due to the strong van der Waals and magnetic attraction forces of ZVI, synthesizing ZVI nanoclusters with a subnanometre size while retaining their surface activity and avoiding aggregation is challenging. Moreover, NZVI particles can be oxidized easily after the removal of contaminants even in anoxic environments, which makes the recovery and recycling of the particles very difficult. Here, for the first time, ultra-small zero-valent iron (ZVI) nanoclusters are successfully prepared in a micelle assisted method under mild conditions, and can be recycled simply. It is found that by encapsulating Fe³⁺ within the micelles, controlling the release of sulfur ions (S²⁻) from thiourea and forming the FeS nanoparticles as intermediates, the ZVI nanoclusters are produced with a precisely controlled size (<1 nm). A large number of zero-valent iron nanoclusters were assembled into quasi-spherical assemblages (with around 5 nm size), in which most of the nanoclusters exist discretely because of being coated by entangled hydrocarbon chains of the surfactant. The ZVI nanoclusters (with a diameter of <1 nm) exhibit excellent dispersibility and accessibility in solution, presenting significantly enhanced catalytic activity in the removal of p-nitrophenol from water. The as-prepared ZVI nanoclusters possess excellent stability and durability with the aid of NaBH₄. Their catalytic activity/reusability can be comparable to those of the commonly used noble metal catalysts.