Fe3O4 and Fe3O4/Ag core-shell nanocomposite powders were synthesized via the co-precipitation method. Structure, microstructure, magnetic, and optical properties of Fe3O4/Ag and Fe3O4 were studied. XRD patterns and Uv-Vis spectra showed that nanostructure Fe3O4 and Fe3O4/Ag particles were successfully synthesized. AFM and MFM mode micrographs of Fe3O4 and Fe3O4/Ag powders confirm the formation of Fe3O4 particles in the nano-scale range. Both Fe3O4 and Fe3O4/Ag composite powders represented the superparamagnetic behavior due to the formation of nano-sized Fe3O4 particles. Furthermore, in-situ synthesis of Ag on the surface of magnetite nanoparticles increased the particle size, resulting in a decrease in the saturation magnetization. Moreover, based on the Maxwell-Garnet effective medium theory, a theoretical model was developed to determine the optical properties of suspended core-shell nanoparticles. A very good agreement may be found between the theoretical and experimental results. In addition, the local electric field in the particles, evaluated using the numerical Finite Element Method, showed that the electric field in the magnetite core may be amplified up to 20 times at the symmetrical SPR wavelength mode, depending on the silver shell thickness.