This study comprehensively investigated the effect of iron-oxide nanoparticles (NPs) on weathering durability and thermal resistance of wood-plastic composites (WPCs). The hydrophobic nature of NPs improved the dimensional stability of WPCs. The small size of NPs deposits the voids in the matrix, which helps to increase the mechanical properties, even after weathering test. The decrease of modulus of rupture (MOR) reached up to 16% for control samples, while it was 2% for IO40-1. Despite the intensive weathering conditions, NPs cover the surface of materials like a UV shield, improving WPCs' UV resistance. Moreover, the increase in the wood and NPs content limited the UV degradation, which resulted in lower color changes. The attenuated total reflectance-Fourier transform infrared spectroscopy (ATR-FTIR) analysis also proved that there were nearly no changes in the characteristic bands of polymer (2916 and 2846 cm−1) and wood (1512 cm−1). The microscopic investigation, however, revealed the deterioration on the surface of WPCs after weathering exposure. Even though UV degradation is inevitable, iron oxide NPs significantly preserved the WPCs surface. However, there were also crack formations, which were also inhibited. On the other hand, NPs decelerated the thermal degradation by acting as a heat barrier. Thermogravimetric analysis (TGA) analysis revealed an increase in the degradation temperature. Limit oxygen index (LOI) values also increased up to 27.6%, which demonstrated an improvement against flammability.