Photoelectron spectroscopy is used to study iron particles grown by depositing Fe on a fullerene film. For small amounts of iron deposited on the fullerenes, the Fe 3p core level is shifted \ensuremath{\sim}0.4 eV to greater binding energy and a clear Fermi edge is missing. Theoretical studies by other workers, principally calculations of the electronic structure for small clusters, suggest that the iron is dispersed in the fullerene matrix in the form of small clusters. When the amount of Fe increases and the clusters become larger, some of the Fe valence states move towards ${\mathit{E}}_{\mathit{f}}$ and the valence band develops a Fermi edge indicative of metallization.