Metal matrix composites have grown rapidly with their usefulness in many applications for industries. The present research aims to study the formation of Fe2SiO4 and pearlite phases, the reaction product of iron-silica sand nanoparticles composites. In this study iron based silica sand nanoparticles composite with 5, 10, 15 and 20wt. of silica sand nanoparticles were developed using powder metallurgy technique being sintered at 1100°C. It was observed during the X-Ray Diffraction (XRD) and XPS analysis that the reaction between iron and silica sand nanoparticles forms the Fe 2SiO4 phase. Field Emission Scanning Electron Microscopy (FESEM) analysis at higher magnification also reveals the formation of pearlite phase. The presence of liquid phase sintering is also observed with frozen liquid spots at microstructure of iron-silica sand nanoparticles reaction. © (2013) Trans Tech Publications, Switzerland.