Mullite-based nanocomposites with embedded FeCr alloy nanoparticles were synthesized by reduction of sol-gel prepared Al-5.4(Fe0.8Cr0.2)(0.6)Si2O13 solid solution in hydrogen. The feature of the formation of FeCr alloy is characterized by XRD analysis. Structural characterization revealed that the intragranular FeCr alloy nanoparticles along with inter-granular iron grains were obtained in as reduced sample. After acid washing, the intergranular metal grains were eliminated. The static magnetic properties of nanocomposite powders were studied using Magnetic Property Measurement System. It is found that part of the intra-granular metal nanoparticles have superparamagnetic behavior at room temperature.