Iron and lithium atoms have been trapped in cold, frozen pentane. Upon warming, atom agglomeration took place to form Fe-Li clusters/particles that incorporated some fragments of the organic solvent. At room temperature very small alpha-Fe crystallites embedded in a matrix of nanocrystalline Li were obtained. Particle sizes averaged 21 nm with alpha-Fe crystallite regions of about 2.8-3.8 nm. This ultrafine powder (140 m2/g surface area) was pyrophoric. Upon allowing slow air exposure, particle growth took place and surface area dropped. However, alpha-Fe crystallites remained. Rapid air exposure caused intense heating to a dull red heat due to oxidation. Surprisingly, alpha-Fe particles remained as dominant and were encapsulated and protected from further oxidation by a Li2O/LiOH/Fe2O3 coating. Heat treatment of the fresh Fe-Li powder caused phase separation of Fe and Li, with alpha-Fe crystallite growth. Air oxidation again formed a protective outer layer of Li2O/LiOH/Fe2O3. By choice of proper temperature and time of heating the alpha-Fe crystallite sizes could be controlled. However, upon longer term heating at 470-degrees-C, significant amounts of Fe3C formed due to alpha-Fe crystallites reacting with carbonaceous fragments from the pentane solvent. Heating to even higher temperature then caused Fe3C decomposition to larger alpha-Fe crystallites and carbonaceous species. Characterization methods included Mossbauer, X-ray powder diffraction, surface area measurements, electron microscopy, elemental analyses, X-ray photoelectron spectroscopy, and differential scanning calorimetry. These results demonstrate, for the first time, that normally immiscible metals can be forced to form metastable clusters by using low-temperature, kinetic growth control methods. Also, the isolation of encapsulated, protected alpha-Fe and Fe3C nanoscale particles is a significant finding vis-a-vis new magnetic materials.