This paper presents the preparation and characterization of Polydimethylsiloxane (PDMS) composites with Carbon encapsulated iron nano particles (CEFeNPs). The mutual interactions between the CEFeNPs and PDMS were studied by Raman Spectroscopy and Scanning electron microscopy. Structural characterization on the flexible composite films and CEFeNPs was carried out using X-ray diffractometer. Transmission electron microscopy (TEM) revealed the structure of CEFeNPs, with an iron core enveloped by 5 nm thick layer of graphitic carbon. The main goal of this work was to investigate the influence of temperature on magnetic properties of composites by applying a magnetic field ranging from −1.5 to 1.5 Tesla at 10 K, 100 K and 300 K. The saturation magnetization, retentivity, coercivity and squareness ratio found to improve with increase in filler loading and by lowering temperature. For 50 wt% composite of 250 μm thickness, the electromagnetic interference shielding effectiveness (EMI SE) is found to be 21.925 dB at 8 GHz. The shielding performance of cured composites enhanced by increasing the thickness of the sample and for 1.5 mm thick film of 50 wt%, an EMI SE of 27.1 dB was obtained at 8 GHz.