A growth of γ-size γ-iron crystallites was found in iron/magnesium oxide (MgO) composite films prepared at 350°C in a simultaneous vacuum-deposition. The relationship between the growth condition and structures was systematically studied. The γ-iron crystallites with a thickness of 1-2 nm epitaxially embedded in a MgO single crystal film were found to transform into α-iron ones with increasing the thickness. The thermo-magnetic curves and the electron energy loss spectra of the composite films suggested that the γ-iron crystallites had a high-spin magnetic state similar to that in a-iron crystallites in MgO films previously reported.