A novel two-stage reduction process for synthesis of Fe nanoparticle with High purity and low density in a fluidized bed reactor has been developed in this work. The agglomerated Fe nanoparticle via two-staged fluidized bed process having a high Fe content (above 99 wt %), a low density (0.9 g/cm³) and a uniform particle size (approximately 100 μm) exhibited highest combustion activity. The purity and thermal properties of the Fe nanoparticles are mainly depended on the reaction temperature and the fluidization quality. The reduction temperature of the two staged fluidized bed is a key factor for obtaining high-purity Fe nanoparticles. The core is the formation of self-agglomerated particles during the first stage at lower temperatures range of 400 -450 ^oC. The agglomerated particles can resist the sintering of the newly formed Fe nanoparticle. The newly formed porous nanoparticles via the fission of the larger nanoparticle during the first-stage also enhanced the H₂ diffusion into the un-reacted core of the particles. This approach can be extended to the synthesis of other ultrafine/nanosized metals or metal oxides through a fluidization method.