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Biocompatible magnetic nanoparticles have been found to be promising in several biomedical applications for tagging, imaging, sensing, and separation in recent years. Most magnetic particles or beads currently used in biomedical applications are based on ferromagnetic iron oxides with very low specific magnetic moments of about 20-30 emu/g. Here, we report a new approach to synthesize monodispersive core-shell nanostructured clusters with high specific magnetic moments above 200 emu/g. The Fe nanoclusters, ranging in size from 2 to 100 nm, are produced from a newly developed cluster source and go to a deposition chamber, where a chemical reaction starts, and the nanoclusters are coated with Fe oxides. High-resolution transmission electron microscopy images show the coatings are very uniform. The core-shell nanoclusters are superparamagnetic at room temperature for sizes less than 12 nm, and have the coercivity of about 1.5 kOe at low temperature (5 K).