Ion-implantation and thermal-processing methods have been used to form nanophase magnetic precipitates of metallic cobalt that are embedded in the near-surface region of single crystals of Al2O3. The Co precipitates are isolated, single-crystal particles that are crystallographically oriented with respect to the host Al2O3 lattice. Embedded nanophase Co precipitates were formed by the implantation of Co+ at an energy of 140 keV and a dose of 8 × 1016 ions/cm2 followed by annealing in a reducing atmosphere. The implanted/annealed Co depth profile, particle size distributions and shapes, and the orientational relationship between the nanophase precipitates and the host crystal lattice were determined using RBS/channeling, transmission electron microscopy, and x-ray diffraction. Magneto-optical effects arising from Co precipitates formed in the near-surface region of Al2O3 were observed and characterized using magnetic circular dichroism. Magnetic properties of the Co-particle/host nanocomposites were investigated in the temperature range of 77 to 295 K in applied fields of up to 10 kG using a superconducting quantum interference device (SQUID) magnetometer. Implantation of the Co particles by Pt or Xe ions produced a large anisotropic increase in their coercivity. Accordingly, these magnetic nanoparticle systems may be of interest for magnetic data storage applications. Details of the magnetic properties of the Co/Al2O3 nanocomposites including their retentivity, coercivity, saturation field, and magnetic anisotropy are presented.