Granular Fe metal films consisting of ultrafine Fe granules imbedded in a SiO//2 matrix have been fabricated. The granular microstructure has been revealed by transmission electron microscopy (TEM). Electron diffraction indicates that the Fe granules are bcc alpha -Fe and the SiO//2 matrix is amorphous. **5**7Fe Moessbauer spectroscopy indicates that there are no measurable traces of Fe oxides. The magnetic properties of the granular Fe films deviate from those of bulk Fe due to single domain effects.