Growth of magnetron sputtered Fe films on clean single crystalline MgO (001) substrate has been studied using in situ grazing incidence small angle x-ray scattering (GISAXS) and grazing incidence nuclear resonant scattering (GINRS) measurements. While GISAXS provides information about morphological changes, GINRS provides information about structural and magnetic properties, thus making it possible to correlate the evolution of magnetic properties with that of morphology and structure of the film. The film exhibits a Volmer-Weber type growth, with percolation transition occurring around 2 nm film thickness. Presence of a finite quadrupole splitting, as seen in GINRS measurements, suggests a significant distortion from cubic symmetry up to a film thickness of 3.5 nm, which can be attributed to hybridization between Fe 3d and O 2p orbitals at the interface as well as in-plane tensile strain induced as a result of coalescence of islands. Initially Fe islands exhibit superparamagnetic relaxation, while finite magnetic moment appears upon formation of macroscopic percolation islands. The film exhibits a weak perpendicular magnetic anisotropy (PMA), which vanishes concurrently with disappearance of structural distortion, suggesting that the observed PMA at least partly originates from inherent strain in the film. No presence of any known oxide of Fe was detected at the interface. More precise information about topological and magnetic structure of the interfaces between Fe and MgO layers is obtained using combined x-ray reflectivity and nuclear resonance reflectivity measurements on a 57 Fe/MgO multilayer. Measurements show that about two monolayers of Fe at the interface have a reduced hyperfine field, providing evidence for hybridization with O atoms, as predicted by theory.