Magnetic nanoclusters have novel applications as magnetic sensors, spintronic and biomedical devices, as well as applications in more traditional materials such as high-density magnetic storage media and high performance permanent magnets. We describe a new synthesis protocol which combines the advantages of ion implantation and electron beam annealing (EBA) to produce surface iron nanoclusters. We compare the structure, composition and magnetic properties of iron nanoclusters fabricated by low dose 15 keV Fe implantation into SiO2 followed by 1000 °C EBA or furnace annealing. Atomic force microscopy (AFM) and high resolution transmission electron microscopy (HRTEM) images together with superconducting quantum interference device (SQUID) magnetometry measurements show that only EBA leads to the rapid formation of surface crystalline Fe spherical nanoclusters, showing magnetic moments per Fe atom comparable to that of bulk bcc Fe and superparamagnetic properties. We propose a fabrication mechanism which includes e-beam enhanced desorption of SiO2. This method has potential for fabricating nanoscale magnetic sensors integrated in microelectronic devices.