In this study, the bifunctional Fe@C@Gd2O3:Eu3+ composites were prepared via a simple co-precipitation progress followed by a subsequent heat treatment under N-2 atmosphere. The reactive carbon interlayer offers many advantages including separating photoluminescent material from magnetic material and reducing magnetite Fe3O4 to metal Fe. X-ray diffraction (XRD), scanning electron microscopy (SEM), transmission electron microscopy (TEM), Fourier-transform infrared (FT-IR), vibrating sample magnetometer (VSM) and photoluminescence spectroscopy (PL) were used to analyze the structure, morphology, magnetic and luminescence properties of the composites. The Fe@C@Gd2O3:Eu3+ composites with well-crystallized and core-shell structure were prepared and displayed good ferrimagnetic behavior at room temperature and a strong red emission. In addition, due to the excellent magnetic and luminescence properties of the prepared composites, they may have many great potential applications in many fields, such as biological imaging, cell tracking and drug delivery. (C) 2013 Elsevier B.V. All rights reserved.