This paper investigates the influence of iron oxide (Fe2O3) nanoparticles on the physical properties of medium density fiberboard (MDF). In this study, three different nano iron oxide loadings, i.e., 0.5, 1.5 and 2.5 wt %, and untreated poplar fibers were used. The iron oxide (Fe2O3) nanoparticles were initially dispersed into urea formaldehyde resin using a high-vacuum mechanical stirrer before being incorporated into natural fibers. The untreated poplar fibers were wound onto metal frames to produce dry mat layers. Twenty different composite samples were made. All composite samples were tested for physical properties, i.e., thickness swelling, water absorption, moisture content and density in accordance with standards EN-317, ASTM D570, EN-322 and EN-323 respectively. Based on the results, it was found that the incorporation of homogeneously dispersed iron oxide nanoparticles significantly improved thickness swelling (Ts). Moreover, water absorption (WA) improved by up to 49.18 and 34.54%, respectively, at the highest loading of 2.5 wt %. Microstructure was investigated and characterized with scanning electron microscopy (SEM), x-ray diffraction (XRD) and energy dispersive spectroscopy (EDS) and we examined whether iron oxide nanoparticles exhibit good interactions with urea formaldehyde and poplar wood fibers. Heat and mass transfer investigation in the form of differential scanning calorimetry (DSC) and thermogravimetric analysis (TGA) was carried out due to the impact of Fe2O3 nanoparticles. The curing temperature and thermal stability of the resin were enhanced due to the addition of Fe2O3 nanoparticles. A one-way ANOVA statistical analysis was established to effectively control the use of Fe2O3 nanoparticles. Therefore, the presence of iron oxide nanoparticles in an epoxy polymer contributes to a stiffer matrix that, effectively, enhances the capability of improving the physical properties of nano MDF.