Nanostructured metallic iron particles in montmorillonite matrix have been prepared at ambient temperature through iron intercalation followed by reduction of resulting iron pillared montmorillonite with potassium borohydride. The resulting nanocomposites have been characterized by powder X-ray diffraction (PXRD), scanning electron microscopy (SEM) with energy dispersive X-ray analysis (EDX), transmission electron microscopy (TEM), UV-VIS-diffuse reflectance spectrometer (UV-VIS). The catalytic performances of resulting nanocomposites have been evaluated by probe phenol oxidation reaction with hydrogen peroxide. The results reveal that the nanosized iron polyoxocations intercalated clays can be successfully obtained by conventional synthesis of pillared clays, and after reduction of pillars, the highly dispersed zero-valent iron nanoparticles in clay matrix with diameter in the range of 3-10 nm can be successfully yielded. Over the nanocomposites catalyst prepared at a molar ratio of [CO 32) ]/[Fe 3+ ] = 0.5, the catalytic conversion of phenol oxidation is 49.5% with a 67.4% of selectivity to carbon dioxide and tar. The iron species dispersed in clay matrix may provide the catalytic active sites and the size of iron species has an effect on selectivity. More highly isolated iron nanoparticles dispersed in clays could lead to higher catalytic deep oxidation.