Nanocomposites of iron in sapphire (α-A12 O3) prepared by ion implantation have been studied as a model to investigate the potential of such materials for applications in high technology areas. The implantation was performed with 160 keV ions at several doses; the nanocomposites were then annealed at selected temperatures between 700 and 1400°C in an Ar-4&H2 atmosphere for 1 hour. Rutherford backscattering spectroscopy and high resolution transmission electron microscopy (TEM) were used to characterize the structure of these nanocomposites. Measurements showed that damage depth extended to about 300 nm and the embedded iron extended to about 200 nm. This region became amorphous when the fluence reaches 2x1017 Fe/cm2 at this energy. At this dose, oriented precipitates with diameters of 2 to 3 nm were identified by TEM techniques as α-Fe which had the following orientation relationship with the sapphire matrix: <111>Fe||<310>Sapphire and (011)Fe||{006}sapphire. Thermal annealing could be used to restore the crystallinity to the damaged near-surface region, to form the metallic colloids, and also to coarsen the precipitates. The optical density and luminescence spectra were also measured. The predominant defects were oxygen vacancies with two electrons (F center) at the known absorption peak of 200 nm.