The objective of this investigation is to find a less‐expensive and less‐toxic environmentally benign route for the preparation of magnetic PANI nanocomposite particles. For this citric acid, a weak organic tricarboxylic acid has been used during seeded chemical oxidative polymerization of aniline in presence of variable amounts of Fe3O4 nanoparticles. Nanosized Fe3O4 particles are first prepared by co‐precipitation of Fe2+ and Fe3+ from their alkaline solutions. Then in the second step, magnetic nanocomposite particles—named as Fe3O4/PANI—are prepared by seeded chemical oxidative polymerization of aniline using ammonium persulfate (APS) as oxidant. Independent of Fe3O4 content, Fe3O4/PANI nanocomposite particles possessed comparable high electrical conductivity having the same magnitude as HCl‐doped PANI particles (2.13 × 10−3 S/cm). This result suggested that addition of citric acid during seeded chemical oxidative polymerization not only promoted solubilization of aniline but also functioned as stabilizer and doping agent. Iron oxide content critically influenced the stability, morphology, and magnetic properties of the produced nanocomposite particles. The saturation magnetization and magnetic susceptibility increased with the increase of Fe3O4 content. The nanocomposite particles prepared with core/shell ratio of 0.6/1 (w/w) exhibited the strongest paramagnetism and aligned into fiber‐like structure. The analysis of electromagnetic properties and spectral data from FTIR, X‐ray diffraction (XRD), X‐ray photoelectron spectroscopy (XPS), and thermogravimetry (TG) confirmed the complete coverage of Fe3O4 nanoparticles by PANI layer. POLYM. COMPOS., 39:4628–4636, 2018. © 2017 Society of Plastics Engineers