Magnetic powders based on metallic iron crystallites encapsulated in submicron-sized spherical silica particles have been obtained and investigated. The metallic iron clusters have been produced by the exploding wire method. The silica shells have been prepared via the modified sol-gel Stöber method and the metallic particles have been entrapped by occlusion during the silica powder formation. The entrapped iron particles are partially oxidized due to the nature of the synthetic methods employed. The obtained hybrid materials have been investigated by electron microscopy, X-ray diffraction, magnetic and ζ-potential techniques. Such materials can be employed in such applications as e.g. magnetically-controlled drug vectors or electromagnetic field-shielding.