Formation of iron oxide nanoparticles within the internal cages of Na-Y zeolites was investigated. Sodium ions within the zeolites were replaced with iron(II) ions. Elemental composition studies showed a significant amount of iron in the exchanged sample. NaOH and dropwise additions of H 2 O 2 at 60°C triggered formation of zeolite-iron oxide systems. X-ray diffraction (XRD) patterns showed diminishing zeolite peaks along with evolution of peaks corresponding to ␥-Fe 2 O 3 and ␣-Fe 2 O 3 with increasing NaOH concentration. Morphological changes from hexagonal-shaped zeolite to clusters of fine particles were observed under scanning electron microscope. Particles with about 15-nm diameter were detected by transmission electron microscopy. ␥-Fe 2 O 3 crystallites of 13.4 nm were determined from the broadening of XRD peaks. The magnetization curves of samples (precipitated using NaOH with concentrations of 2.0 M and above) showed absence of hysteresis and passed through the origin, indicating the particles are superparamagnetic. Gas adsorption-desorption measurement of the system precipitated with 2.0 M NaOH revealed a 26% increase in its specific surface area, indicating the presence of nanometer-sized particles within the zeolites.