Precipitation of beta-FeOOH in the presence of aggregated surfactant domains shows expected influences on particle size and distribution. The crystal structure of the product is similar to that found in homogeneous aqueous solution. Surfactant stabilization of the nanoparticles in dispersion is observed over several months in lamellar liquid crystal media. An important and unexpected observation is seen upon incubation of the precipitated material in the presence of excess surfactant. Particle size reduces and the size distribution becomes more narrow as the time of contact with the medium is increased.