Equilibrium geometries, total energies, ionization potentials, electronic structure, and magnetic properties of Fe encapsulated Si. clusters containing 9-11 Si atoms have been calculated using the density functional theory and generalized gradient approximation for exchange and correlation. The geometries of bare Si-n clusters are substantially modified due to Fe, which occupies an endohedral position. The Si10Fe cluster is found to be more stable than its neighbors even though not all Si atoms are fourfold coordinated. The stability of Si10Fe, however, is consistent with the 18-electron rule. The magnetic moment of Fe is quenched in all the clusters studied. (C) 2003 Elsevier Science B.V. All rights reserved.