Abstract Fe65Co35 alloy nanoclusters prepared by using a plasma-gas-condensation method were encapsulated into Ni0.5Zn0.5Fe2O4 thin film to form new-type films in a nanocluster beam composite film deposition system. An average size of the Fe65Co35 alloy nanoclusters was about 5.5 nm with a narrow size distribution. Compared with that of Ni0.5Zn0.5Fe2O4 thin film, saturation magnetization of the [email protected] composite thin films which contained 6 wt.% Fe65Co35 alloy nanoclusters was increased by about 64%, while the coercivity was reduced by almost 44.7%. Meanwhile, resistivity still maintained at a high value (1.67×1010μΩ cm). The influence of annealing temperature on structure and magnetic properties of the [email protected] composite thin films was also investigated. As the annealing temperature was increased, saturation magnetization rose gradually while coercivity revealed a complicated change tendency.