Carbon encapsulated NiFe nanoparticles (NiFe@C) have been prepared by high-temperature methane encapsulation of the bare bimetallic particles on alumina. High-resolution transmission electron microscopy pictures show that about 6-nm thick carbon layers encapsulate 10-20-nm diameter NiFe nanoparticles. The NiFe nanoparticles are shown to be single-crystalline and no carbide is found at the NiFe-C interface. This is confirmed by the electron energy-loss spectroscopy (EELS) measurements that in addition show that both Ni and Fe have a zero (metal) valence and that only graphite is present. EELS also shows that the nickel-to-iron ratio is exactly unity for all particles studied. Metallic Pd nanoparticles with a diameter of 1-2 nm can be anchored on the carbon layers, which creates a Pd/NiFeC&C type of catalyst that could be used for liquid phase reactions. The EELS analysis reveals that part of the nanoparticles present are not Pd but other oxidic carbon encapsulated nanoparticles.