Magnetic hyperthermia (MH) shows great potential in clinical applications because of its very localized action and minimal side effects. Because of their high saturation magnetization values, reduced forms of iron are promising candidates for MH. However, they must be protected in order to overcome their toxicity and instability (i. e., oxidation) under biological conditions. In this work, a novel methodology for the protection of iron nanoparticles through confinement within graphitic carbon layers after thermal treatment of preformed nanoparticles supported on carbon is reported. We demonstrate that the size and composition of the nascent confined iron nanoparticles, as well as the thickness of their protective carbon layer can be controlled by selecting the nature of the carbon support. Our findings reveal that a higher nanoparticle–carbon interaction, mediated by the presence of oxygen‐containing groups, induces the formation of small and well‐protected α‐Fe‐based nanoparticles that exhibit promising results towards MH based on their enhanced specific absorption rate values.