We report on the metalorganic chemical vapor deposition (MOCVD) of GaN:Fe and (Ga,Fe)N layers on c-sapphire substrates and their thorough characterization via high-resolution x-ray diffraction (HRXRD), transmission electron microscopy (TEM), spatially-resolved energy dispersive X-ray spectroscopy (EDS), secondary-ion mass spectroscopy (SIMS), photoluminescence (PL), Hall-effect, electron-paramagnetic resonance (EPR), and magnetometry employing a superconducting quantum interference device (SQUID). A combination of TEM and EDS reveals the presence of coherent nanocrystals presumably FexN with the composition and lattice parameter imposed by the host. From both TEM and SIMS studies, it is stated that the density of nanocrystals and, thus the Fe concentration increases towards the surface. According to Hall effect measurements, electrons from residual donors are trapped by mid-gap Fe acceptor states in the limit of low iron content x 0.4%, indicating that the concentration of Fe 2+ ions increases at the expense of Fe ions in the 3+ charge state. This effect is witnessed by photoluminescence (PL) measurements as changes in the intensity of the Fe 3+ -related intra-ionic transition, which can be controlled by co-doping with Si donors and Mg acceptors. In this regime, EPR of Fe 3+ ions and Curie-like magnetic susceptibility are observed. As a result of the spin-orbit interaction, Fe 2+ does not produce any EPR response. However, the presence of Fe ions in the 2+ charge state may account for a temperature-independent Van Vleck-type paramagnetic signal that we observe by SQUID magnetometry. Surprisingly, at higher Fe concentrations, the electron density is found to increase substantially with the Fe content. The co-existence of electrons in the conduction band and Fe in the 3+ charge state is linked to the gradient in the Fe concentration. In layers with iron content x 0.4% the presence of ferromagnetic signatures, such as magnetization hysteresis and spontaneous magnetization, have been detected. A set of precautions has been undertaken in order to rule out possible sources of spurious ferromagnetic contributions. Under these conditions, a ferromagnetic-like response is shown to arise from the (Ga,Fe)N epilayers, it increases with the iron concentration, it persists up to room temperature, and it is anisotropic -i.e., the saturation value of the magnetization is higher for in-plane magnetic field. We link the presence of ferromagnetic signatures to the formation of Fe-rich nanocrystals, as evidenced by TEM and EDS studies. This interpretation is supported by magnetization measurements after cooling in-and without an external magnetic field, pointing to superparamagnetic properties of the system. It is argued that the high temperature ferromagnetic response due to spinodal decomposition into regions with small and large concentration of the magnetic component is a generic property of diluted magnetic semiconductors and diluted magnetic oxides showing high apparent Curie temperature.