Recently, researches indicate that grain boundaries and interfaces can be the major factors of magnetoresistance effects, which has attracted renewed interests on the colossal magnetoresistance materials. In this article, the magnetic behaviours and magnetotransport properties of (La 0.7 Pb 0.3 MnO 3 ) 1-x (Fe 2 O 3 ) x composites have been investigated. Ferromagnetism is gradually suppressed as the weight percentage of Fe 2 O 3 is increased. Saturation magnetization (M S ) decreases from 78.7 emu/g for x = 0.0 to 60.6 emu/g for x = 0.2, while ferromagnetic transition temperature (T C ) remains around 346K for all composites. The resistivity increases significantly as the x value increases in these composites. It is suggested that the introduction of Fe 2 O 3 into the composites acts as a separation layer between La 0.7 Pb 0.3 MnO 3 grains. The enhancement of magnetoresistance has been verified with the addition of Fe 2 O 3 into the composites.