A novel porous tube reactor that combines simultaneous reactions and continuous dilution in a single-stage gas-phase process was designed for nanoparticle synthesis. The design is based on the atmospheric pressure chemical vapor synthesis (APCVS) method. In comparison to the conventional hot wall chemical vapor synthesis reactor, the APCVS method offers an effective process for the synthesis of ultrafine metal particles with controlled oxidation. In this study, magnetic iron and maghemite were synthesized using iron pentacarbonyl as a precursor. Morphology, size, and magnetic properties of the synthesized nanoparticles were determined. The X-ray diffraction results show that the porous tube reactor produced nearly pure iron or maghemite nanoparticles with crystallite sizes of 24 and 29 nm, respectively. According to the scanning mobility particle sizer data, the geometric number mean diameter was 110 nm for iron and 150 nm for the maghemite agglomerates. The saturation magnetization value of iron was 150 emu/g and that of maghemite was 12 emu/g, measured with superconducting quantum interference device (SQUID) magnetometry. A computational fluid dynamics (CFD) simulation was used to model the temperature and flow fields and the decomposition of the precursor as well as the mixing of the precursor vapor and the reaction gas in the reactor. An in-house CFD model was used to predict the extent of nucleation, coagulation, sintering, and agglomeration of the iron nanoparticles. CFD simulations predicted a primary particle size of 36 nm and an agglomerate size of 134 nm for the iron nanoparticles, which agreed well with the experimental data.