Abstract: Graphite encapsulated iron nanoparticles were prepared by ball-milling and subsequent vacuum annealing a mixture of expanded graphite and iron powders.The microstructure,friction and wear properties as lubricant additive and forming mechanism of the nanoparticles were investigated.Results show that the nanoparticles had a size range of 10-150 nm,and it consisted of graphite with well crystallinity encapsulated spherical iron nanoparticles.The nanoparticles as lubricant additive displayed a well anti-friction and abrasion resistance,and the effect was more remarkable at higher load.