A unique approach for lightweight multifunctional composites was developed using Fe3O4 nanoparticles and polypyrrole-coated Fe3O4 particles as fillers. Fe3O4 particles are a good candidate for filler in a multifunctional composite system because they can reinforce mechanical properties of a polymer matrix and impart magnetic properties into a composite. Polypyrrole coating on Fe3O4 particles was utilized to incorporate electrical conductivity to the properties of composites. The effects of filler size and filler content were studied on both the mechanical and electromagnetic properties. Fe3O4 nanoparticles improved fracture toughness, but they compromised strength and modulus. Polypyrrole-coated Fe3O4 has potential for multifunctional material applications because the coating allows for concurrent increase in magnetic permeability and electrical conductivity in a composite. The polypyrrole coating also improved the strength of the composite. Fe3O4 nanoparticles were a major part of this work from their synthesis to their application in composites. The surface effect on magnetic properties was analyzed for Fe3O4 nanoparticles, resulting in a more accurate calculation of the magnetically dead layer thickness than previously reported. The results from this work contributed to further understanding of synthesis and characterization of magnetic nanoparticles, fabrication and characterization of nanocomposites, and design and development of lightweight multifunctional materials. Although the properties of the fabricated composites require further improvement, the methodology and approach provide a basis for future work in development of lightweight multifunctional composites.