A novel approach for in-situ room temperature synthesis of magnetic nanocomposite of γ-Fe2O3 is described. 57Fe Mössbauer spectroscopy has been used to study its magnetic behavior. Observation of a relaxed six line spectrum at room temperature and increase in hyperfinefield values at 77 K are typical characteristics of magnetic microcrystalline particles, interestingly, the studies at high temperature also show an increase in hyperfine magnetic field values, though it is quite unusual for small magnetic particles. This unusual behavior may, however, be attributed to some new kind of interaction between magnetic particles and the polymer matrix, or between magnetic particles themselves caused by conformational changes in the copolymer matrix at higher temperatures. Moreover, these studies clearly indicate that both the polymer matrix and zinc ions play definite roles in the clustering of γ-Fe2O3 particles, resulting in the phenomenon of relaxation over a wide range of temperatures. ©1998 Acta Metallurgica Inc.