In this work, a chemical precipitation procedure for decorating graphene oxide (GO) with Fe2O3 nanoparticles was described. Iron(III) chloride (FeCl3) was employed to generate the nano‐Fe2O3 particles onto the GO surface in the presence of sodium hydroxide. The Fe2O3@GO hybrid was characterized by various techniques of X‐ray diffraction, Fourier transform infrared spectroscopy, Field‐emission scanning electron microscope, Raman spectra, and Atomic‐force microscopy. The epoxy (EP)‐matrix nanocomposites containing various Fe2O3@GO loadings (0–0.8 wt% at a step of 0.2) were prepared by mechanical stirring and ultrasonic treatment. Mechanical properties of these composites were explored using the three‐point bending and dry‐sliding wear tests. The results revealed that the best flexural and wear behaviors were related to the specimens containing 0.2 and 0.6 wt% Fe2O3@GO hybrid, respectively. The incorporation of 0.2 wt% Fe2O3@GO was found to increase the flexural strength and modulus by 24% and 29%, respectively. Additionally, mass reduction and friction coefficient were decreased by 97% and 66% respectively, due to the addition of 0.6 wt% Fe2O3@GO. Most importantly, in comparison with the untreated‐GO/EP composite, the specimens containing Fe2O3@GO have attained higher improvements in flexural and wear properties. Finally, morphology of the fractured and worn surfaces was also evaluated.