Electrospun magnetic iron/polyaniline nanofibers with applicable heating performance in an AC magnetic field were developed. A new and low-cost method was introduced to synthesize metallic iron (Fe0) nanoparticles with uniform size distribution. The Fe0 nanoparticles were synthesized in an aqueous environment at room temperature with the assistance of polyvinylpyrrolidone and sodium citrate to tailor their particle sizes ranging from 10 to 20 nm. The experimental results showed that regulating the free iron ions present in the solution is critical for obtaining Fe0 nanoparticles with narrow size distribution. The Fe0 nanoparticles were subsequently incorporated with conductive polyaniline (PANI) to fabricate Fe0/PANI/polycaprolactone nanofibers using an electrospinning technique. The resultant composite nanofibers have controlled fiber diameters and also show electrochemical redox properties originating from the PANI polymer. The heating performance test concluded that both eddy current loss from PANI and Neel relaxation loss of magnetic Fe0 nanoparticles can contribute to the power dissipation of the prepared composite nanofibers. The optimal heating performance can be obtained by adjusting the composition of Fe0 nanoparticles and PANI in nanofibers.