This paper reports rapid, continuous and carbon-nanotube free synthesis of carbon encapsulated magnetic nanoparticles by thermal-plasma expansion technique, which combines the typical advantages of high-temperature plasma assisted synthesis method with efficient particle-size control. Core nanocrystals were encapsulated with few layers of graphitized carbon, which could provide protection against both oxidation and intense chemical treatment. The average iron/iron-carbide nanoparticle diameter (7.7, 9 and 10nm) and the width of the size distribution increased with pressure in the sample collection chamber, as a result of the decreasing quenching rate of the plasma jet. This also resulted in the smaller particles remaining frozen predominantly in the high-temperature γ-Fe phases, part of which was oxidized subsequently and eliminated preferentially during the purification process. All samples could be correlated with smooth variation of magnetic properties; saturation magnetization, remnant magnetization and coercive-field enhancing with increasing chamber pressure or average particle size. The low pressure synthesized sample with smallest average particle size approached super-paramagnetic behavior (saturation magnetization=51.8emu/g, ratio of remnant to saturation magnetization=4.9 and coercive field=52Oe), which may be ideal for biomedical applications. High-pressure samples on the other hand have a higher saturation magnetization (76.3emu/g) and coercive fields (123Oe).