Iron particles encaged in carbon nanocapsules have been produced by the Krätschmer–Huffmann carbon-arc discharge method. Soot, collarette and cathode samples have been characterized by Mössbauer spectroscopy and magnetic measurements in the temperature range 4.2–300 K. Different iron phases and iron-carbon solid solutions have been detected in our samples. The Einstein model has been used to evaluate the coupling constant between the particles and their environment, yielding values of the order 1–10 N/m. Irreversibilities observed at ZFC and FC curves for soot samples would suggest the presence of superparamagnetism only if the particles presented a blocking temperature above 300 K. This work was financially supported by FAPESP (H.R.R., J.A.H.C.) and partially supported by Spanish CITYC under grant MAT99-1063-C04-01. Peer reviewed