This paper focuses on iron-based soft magnetic composites which were synthesized by utilizing the sol-gel method prepared Ni-Zn ferrite particles as insulating compound to coat iron powder, and the influence of NiZnFe₂O₄ content and molding pressure on the magnetic properties was studied. The morphology, magnetic properties and density of Ni-Zn ferrite insulated compacts were investigated. Scanning electron microscope,line-scan EDX analysis and distribution maps show that the iron particle surface is covered with a thin layer of uniform Ni-Zn ferrites. The existing of the insulating layer can effectively improve the electrical resistivity of soft magnetic composites. Magnetic measurements show that the real part of permeability decreases with the increase of the Ni-Zn ferrite content, and the sample with 3%(mass fraction, the same below) Ni-Zn ferrite has an acceptable real part and minimum imaginary part of permeability in comparison with other samples. Results show that the addition of NiZnFe₂O₄ can dramatically decrease the internal magnetic loss, the magnetic loss of coated samples decreases by 83.8% as compared with that of uncoated samples at 100kHz. The density of the Fe-3%NiZnFe₂O₄ compacts reaches 7.14g/cm³ and the saturation magnetization is 1.47T when the molding pressure is 1000MPa.