Recently, materials composed of both soft and hard magnetic phases have been attracting a lot of attention. This paper describes the preparation of composite nanoparticles by the reduction and oxidation of cobalt ferrite (CoFe2O4) nanoparticles. Neither the composite nanoparticles of hard ferrites and soft magnetic materials nor the hydrogen reduction of ferrite nanoparticles has been reported. Therefore, investigation of the relationship between their microstructure and magnetic properties is needed. Our study revealed the cobalt ferrite powders prepared by the coprecipitation method showed the highest coercivity Hc=750 kA•m−1 in the case of ternary cobalt ferrite. After the cobalt ferrite powders were reduced by heat treatment at 450°C for 15 min in hydrogen, the reduced powders were shown to consist of a Fe-Co (bcc) phase and XRD analysis of the lattice parameter suggests the composition was around Fe67Co33. After oxidization of the reduced powder by heat treatment at 300°C for 15 min in air, the powders consisted of a Fe-Co(bcc) phase and a spinel-type phase. TEM analysis revealed that the oxidized particles had a core-shell structure and the shell was shown to have a spinel-type phase, with some amorphous structures. Therefore the magnetic properties of the core-shell powders were shown to exhibit low coercivity Hc=120.4 kA•m−1 and low saturation magnetization σs=80.2 Am2•kg−1.