The requirement for novel therapeutic and diagnostic techniques for biomedical applications has driven the development of multifunctional composite materials. This, in turn, has necessitated the use of novel synthesis and processing techniques for scalable nanocomposite production with tuneable material properties. Atmospheric Pressure Microplasma (APM) is a synthesis technique which has received considerable interest in recent years as a viable route for fabrication of nanoparticles (NPs) and NP/polymer composites. Here, we employ APM synthesis of NPs in solutions demonstrating, for the first time, the in situ synthesis of magnetic NPs (Fe3O4) in a hydrogel; fabricating a magnetic thermo‐responsive hydrogel (poly (N‐isopropylacrylamde)) composite. This demonstrates the applicability of our APM process for producing materials which are potentially relevant to the health sector.