Iron oxide-coated gold nanostars are produced by first synthesizing gold nanostars (ca 150 nm), then introducing a polyvinylpyrollidone coating followed by reducing iron(II) and iron(III) salts on the nanoparticle (NP) surface. Morphological and chemical composition characterizations of these composite nanomaterials were performed via field-emission transmission electron microscopy/energy dispersive spectroscopy studies. The analysis revealed that the majority of the NPs had coating of approximately 1-5 nm thicknesses. The crystal structure of the coating on gold nanostars was determined to be alpha-Fe2O3 with X-ray diffraction analysis. X-ray photoelectron spectroscopy confirmed that the coating is Fe2O3. The magnetic property studies via superconducting quantum interference device magnetometer revealed an antiferromagnetic behavior of the magnetic coating, verifying the existence of antiferromagnetic alpha-Fe2O3 layer on gold nanostars. Surface-enhanced Raman scattering (SERS) spectroscopy performed with crystal violet as the probe molecule confirms continued strong SERS activity for gold nanostars after the iron oxide coating. Having both magnetic and plasmonic properties in one NP system makes these particles suitable for various bio-analytical applications such as biomolecule separation, sensing and magnetic imaging.