This paper presents a synthesis of magnetic nanoparticles of samarium cobalt alloys and the use of iron oxide as a coating layer to prevent the rapid oxidation of as-made Sm-Co nanoparticles. The colloidal nanoparticles of Sm-Co alloys were made in octyl ether using samarium acetylacetonate and dicobalt octacarbonyl as precursors in a mixture of 1,2-hexadecanediol, oleic acid, and trioctylphosphine oxide (TOPO). Such Sm-Co nanoparticle could be readily oxidized by air and formed a CoO antiferromagnetic layer. Exchange biasing was observed for the surface oxidized nanoparticles. In situ thermal decomposition of iron pentacarbonyl was used to create iron oxide shells on the Sm-Co nanoparticles. The iron oxide shell could prevent Sm-Co nanoparticles from rapid oxidation upon the exposure to air at ambient conditions.