In this study, the microstructural, optical, and magnetic properties and specific absorption rate (SAR) of bismuth ferrite/SiO2 nanoparticles were successfully investigated. The coprecipitation method was used to synthesize the nanoparticles. X-ray diffraction patterns showed the presence of sillenite-type Bi25FeO40 with a body-centered cubic structure. The crystallite size of Bi25FeO40 was 35.0 nm, which increased to 41.5 nm after SiO2 encapsulation. Transmission electron microscopy images confirmed that all samples were polycrystalline. The presence of Si–O–Si (siloxane) stretching at 1089 cm−1 in Fourier transform infrared spectra confirmed the encapsulation of SiO2. Magnetic measurements at room temperature indicated weak ferromagnetic properties of the samples. The coercivity of the bismuth ferrite nanoparticles was 78 Oe, which increased after SiO2 encapsulation. In contrast, their maximum magnetization, 0.54 emu g−1, reduced after SiO2 encapsulation. The determined bandgap energy of the bismuth ferrite nanoparticles was approximately 2.1 eV, which increased to 2.7 eV after SiO2 encapsulation. The effect of SiO2 encapsulation on the SAR of the samples was investigated using a calorimetric method. The SAR values of the bismuth ferrite nanoparticles were 49, 61, and 84 mW g−1 under alternating magnetic field (AMF) strengths of 150, 200, and 250 Oe, respectively, which decreased after SiO2 encapsulation. The maximum magnetization and the AMF strength influenced the SAR of the nanoparticles. The results showed that SiO2 has a significant effect in determining the microstructural, optical, and magnetic properties and SAR of the nanoparticles.