Composite Fe(3)O(4)-SiO(2) materials were prepared by the sol-gel method with tetraethoxysilane and aqueous-based Fe(3)O(4) ferrofluids as precursors. The monoliths obtained were crack free and showed both optical and magnetic properties. The structural properties were determined by infrared spectroscopy, x-ray diffractometry and transmission electron microscopy. Fe(3)O(4) particles of 20 nm size lie within the pores of the matrix without any strong Si-O-Fe bonding. The well established silica network provides effective confinement to these nanoparticles. The composites were transparent in the 600-800 nm regime and the field dependent magnetization curves suggest that the composite exhibits superparamagnetic characteristics.