Abstract Iron–iron oxide granular films are fabricated using dc magnetron sputtering. Their structural, magnetic and transport properties are studied in the vicinity of percolation threshold. X-ray photoelectron spectroscopy and transmission electron microscopy confirm the coexistence of iron and FeO x . Magnetic measurement indicates the exchange coupling between the iron and the FeO x matrix. Metal–insulator transition is observed. The non-monotonic temperature dependencies of resistivity occur near the percolation threshold and the mechanism is investigated with the longitudinal and transverse magnetic transport measurement in terms of weak localization.