The Ni: B2 O3 nanoparticles have been synthesized by a novel two-step chemical reduction method, under ambient conditions and subsequent annealing in air. The evolution of this structure has been followed through a sequence of annealing treatments. Structural and magnetic investigations on as-prepared and annealed samples revealed that as-prepared samples are weakly magnetic and develop into spherical ferromagnetic entities with superior magnetic properties. The saturation magnetization (Ms ∼42 emu/g) and coercivity (Hc ∼482 Oe) at room temperature clearly suggest that the air annealed (500 °C) samples are protected from the oxidation due to formation of B2 O3 protective layer. The magnetization results are consistent with the observed microstructural changes and satisfactorily explained on the basis of a core-shell model, where we consider each particle as a magnetically heterogeneous system consisting of a ferromagnetic core of Ni and nonmagnetic shell of B2 O3. These results suggest that this kind of nanocomposite systems might have significant potential as a recording media. © 2009 American Institute of Physics.