Carbon-encapsulated iron nanoparticles have been synthesized on a large scale by co-carbonization of an aromatic heavy oil and ferrocene at 495 degrees C under autogenous pressure. In this paper, the effects of heat treatment at 1000 degrees C on the transformation of morphology and structure of carbon-encapsulated iron nanoparticles were investigated using TEM, HREM and XRD measurements. It was found that the nanoparticles became larger and exhibited various morphologies, e.g. hollow carbon cages and carbon nanotubes, via heat treatment. The disordered carbon shell was transformed into well-ordered graphitic structure under the catalysis of iron core during heat treatment. The transformation mechanism during heat-treatment was discussed in detail. (c) 2006 Published by Elsevier B.V.