The physics of the binding of nanoparticles of goethite and cubic iron oxide as capped by oleic acid has been elucidated in the present study based on the thermal evolution of local structure and magnetic properties using Mössbauer spectroscopy. It is observed that the goethite nanoparticles predominantly undergo topotactic transformation to hemeatite while the assembly of identical bare (not oleic acid capped) nanoparticles composed of goethite and magnetite are subjected to annealing beyond 520 K. In contrast to the results obtained on the bare nanoparticles, accelerated reduction of oleic acid coated nanoparticles of goethite to fully stoichiometric magnetite and subsequently to wustite and α-Fe is observed in the 750–875 K annealing interval. Atomic scale characterization of core–shell structures of different iron oxide phases obtained during the evolution of oleic acid coated nanoparticles of iron oxides has also been provided. The understanding of the present study could be utilized to obtain desired core–shell structures of iron oxides, providing the scope for studying the exchange interaction between the core and shell structures, which exhibit different magnetic ordering.