The present work is focused on the evaluation and characterization of the Magnetooptical Faraday Effect (MOFE) of sol-gel processed composites consisting of maghemite iron oxide nanoparticles embedded in a silica xerogel matrix. These materials are of great interest mainly for magnetic-field sensing applications because of their high MOFE response, even at low magnetic fields. We have implemented an in-situ approach for the composite processing in which nanoparticles precursor are formed while host matrix polymerization and subsequent annealing steps leads to gamma-Fe2O3 nanocrystals growth inside the porous xerogel framework. The samples thus obtained are reddish monoliths showing convenient mechanical properties. This method allows obtaining, with carefully controlled preparation conditions, materials with reproducible mechanical, magnetic and optical properties. It is shown that an additional processing step in which the samples were subjected to thermal oxidation treatment in air, leads to an enhancement more than 10 times in the sample optical transmittance, in comparison with the values of the untreated samples. The study of the magnetooptical behavior of these materials reveals a rather high Faraday rotation, as well as a reproducible and practically reversible linear range at low magnetic fields. (C) 2015 Elsevier B.V. All rights reserved.