We report a novel method for synthesis of alloy PtFe nanoparticles (NPs) of different compositions using γ-Fe2O3 NPs as an iron source. We show here other growth mechanisms than conventional nucleation on a NP surface leading to core-shell NP or seeded NP growth. Depending on reaction conditions, different compositions of PtFe NPs can be obtained. PtFe NPs may coexist with γ-Fe2O3 NPs in the reaction product. This mixture obtained in situ allows much higher catalytic activity in hydrogenation of methyl-3-buten-2-ol than that of only PtFe nanoparticles or merely mixed PtFe and γ-Fe2O3 NPs. The presence of both PtFe and γ-Fe2O3 NPs allows formation of dense and stable NP arrays which hold promise for catalytic applications in microreactors or other reactor designs where a catalytic film is favoured.