Nanocomposite of MgO/Fe2O3 was prepared via a simple precipitation route by which a dispersed system containing nano-MgO flakes and nano-Fe2O3 particles was obtained. It seems that modification of the surface of nano-Fe2O3 by controlling pH and the flaky habit of MgO grown from Mg(OH)(2) were the main criteria for high dispersion yield in the as-received nanocomposite system. Formation of magnesioferrite spinel in consequence of a solid state reaction at significantly low temperature of 600 degrees C was revealed through phase evolution studies carried out by XRD and DSC analyses. The reaction studied at the interface of MgO-Fe2O3 nanoparticles by STEM proved the formation of MgFe2O4 spinel via a counter-diffusion process. (C) 2010 Elsevier B.V. All rights reserved.