Strain-induced self-assembled La 0:7 Sr 0:3 MnO 3 nanoislands of lateral size 50À150 nm and height 10À40 nm have been grown on yttria-stabilized zirconia (001)-substrates from ultradiluted chemical solutions based on metal propionates. The nanoislands grow highly relaxed withstanding the epitaxial relation 001 ð Þ LSMO 110 ½ == 001 ð Þ YSZ 010 ½ and show bulk-like average magnetic properties in terms of Curie temperature and saturation magnetization. The interplay of the magnetocrystalline and shape anisotropy within the nanoisland ensemble results in an in-plane magnetic anisotropy with a magnetocrystalline constant K 1 150 K ð Þ¼À 561 ð ÞkJ=m 3 and in-plane easy axis along the 110 ½ ÀLa 0:7 Sr 0:3 MnO 3 direction as measured, for the first time, through ferromagnetic resonance experiments. Magnetic force microscopy studies reveal the correlation between nanoisland size and its magnetic domain structure in agreement with micromagnetic simulations. In particular, we have established the required geometric conditions for single domain, multidomain, and vortex configurations.