The present invention provides a method for producing nano-sized Fe powder having a polymer coated layer on a surface thereof, so as to prevent the nano-sized Fe powder from being oxidized under atmosphere. The method includes: gasifying an iron pentacarbonyl (Fe(CO).sub.5) or an iron acetate ((CH.sub.3CO.sub.2).sub.2Fe) precursor in a ceramic bubbler; forming nano-sized Fe particles due to the crystallization of Fe gas while mixing the gasified precursor with Ar gas in a reactor; and precipitating the nano-sized Fe particles in a polymer solution in a chamber, before the nano-sized Fe particles are oxidized. According to this technique, Fe powder on the order of tens of nms in size, and having a polymer coated layer, are obtained from the Fe precursor. A system for producing the nano-sized Fe powder is also disclosed.