Carbide-derived carbons with embedded Fe nanoparticles are synthesized by partial chlorination of iron carbide at 600 o C. Interestingly, the residual Fe studied by X-ray absorption near edge spectroscopy, scanning electron microscopy, and transmission electron microscopy show the extraction process does not follow a layer-by-layer extraction process, as proposed in the literature for the chlorination of other carbides. Instead, a large percentage of iron carbide converts to iron (II) and iron (III) chloride nanoparticles, which remain trapped within the resulting nanoporous carbon framework. Further reductive treatment can be used to produce dispersed Fe nanoparticles with an average particle diameter approaching 10nm.