The microstructure and magnetic properties of Ge:Fe thin films grown by molecular-beam epitaxy have been studied by transmission electron microscopy and superconducting quantum interference device magnetometry. Films were deposited on GaAs(001) at substrate temperatures (T-S) ranging from 70 to 400degreesC. Nanoparticles of ferromagnetic Fe3Ge2 form in a single-crystalline Ge matrix for T-S greater than or equal to 450degreesC. The evolution of magnetic order has been evaluated as the particle size increases from 2 nm at T-S = 150degreesC to 15 nm at 400degreesC. The ferromagnetic order of Ge:Fe nanocomposite thin films originates solely from ferromagnetic second-phase particles. (C) 2005 American Institute of Physics.