We describe an environmentally friendly, top-down approach to the synthesis of Au89Fe11 nanoparticles (NPs). The plasmonic response of the gold moiety and the magnetism of the iron moiety coexist in the Au89Fe11 nanoalloy with strong modification compared to single element NPs, revealing a non-linear surface plasmon resonance dependence on the iron fraction and a transition from paramagnetic to a spin-glass state at low temperature. These nanoalloys are accessible to conjugation with thiolated molecules and they are promising contrast agents for magnetic resonance imaging.