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.