The application of iron-based alloys as possible biodegradable medical implants is hindered by low degradation rate in a biological environment. In this research, iron oxide (Fe2O3) was introduced as the cathodic second phase to increase the degradation/corrosion rate of iron. Fe-10Fe2O3 nanocomposites were fabricated from Fe2O3 nanopowder (<50 nm) by partial reduction of 70% dense compacts in hydrogen flow at 400°C. Near to dense (95% theoretical density) specimens were prepared by cold sintering/high-pressure consolidation at ambient temperature. This was followed by annealing at 400°C in argon flow to improve the mechanical properties. The nanocomposites obtained were characterized by X-ray diffraction, scanning electron microscopy (SEM) and high-resolution SEM with EDS analysis. Mechanical properties were tested in compression and bending. Degradation behavior in vitro was studied employing immersion test in saline solution for periods up to 4 weeks. The samples exhibited strength of near to 700 MPa in compression what was 3 times higher than the literature-reported data for spark plasma sintered Fe-10Fe2O3 . Annealing at 400°C resulted in improvement of ductility with retention of nano-structure and high mechanical properties. The degradation rate of cold sintered Fe-10Fe2O3 nanocomposites with <100 nm grain size after 4 weeks immersion was 5-fold that of the nanostructured pure Fe and at least 13 times higher than for Fe-10Fe2O3 composites with grain size 25 micm . The proposed processing approach allows loading of antibiotics and antitumor drugs via incorporation into the open nanopores of the Fe-Fe2O3 nanocomposites under vacuum with slow release from nanopores.