Magnetic materials such as alpha ''-Fe16N2 and alpha-Fe, which have the largest magnetic moment as hard and soft magnetic materials, are difficult to produce as single domain magnetic nanoparticles (MNPs) because of quasistable state and high reactivity, respectively. The present work reports dispersion of agglomerated plasma-synthesized core shell alpha ''-Fe16N2/Al2O3 and alpha-Fe/Al2O3 in toluene by a new bead-mill with very fine beads to prepare single domain MNPs. As a result, optimization of the experimental conditions (bead size, rotation speed, and dispersion time) enables the break-up of agglomerated particles into primary particles without destroying the particle structure. Slight deviation from the optimum conditions, i.e., lower or higher dispersion energy, gives undispersed or broken particles due to fragile core-shell structure against stress or impact force of beads. The dispersibility of alpha ''-Fe16N2/Al2O3 is more restricted than that of alpha-Fe/Al2O3, because of the preparation conditions. Especially for alpha ''-Fe16N2/Al2O3, no change on crystallinity (98% alpha ''-Fe16N2) or magnetization saturation after dispersion was observed, showing that this method is appropriate to disperse alpha ''-Fe16N2/Al2O3 MNPs. A different magnetic hysteresis behavior is observed for well-dispersed alpha ''-Fe16N2/Al2O3 MNPs, and the magnetic coercivity of these NPs is constricted when the magnetic field close to zero due to magnetic dipole coupling among dispersed alpha ''-Fe16N2 MNPs.