Disclosed is a ferrite-ceramic composite powder consisting of fine particles of a ceramic material having a ferrite coating firmly bonded to the surface thereof. The ferrite-ceramic composite powder is manufactured by the steps of immersing pellets of iron in an aqueous solution of ferric chloride in the presence of a magnetic field thereby turning the ferric chloride solution into an aqueous solution of a complex salt, mixing the complex salt solution with an aqueous solution of ferric chloride containing many fine particles of a ceramic material and agitating the mixture to obtain a composite aqueous solution, mixing an aqueous solution of caustic soda with the composite aqueous solution and agitating the mixture to cause deposition of crystals of a ferrite on the surface of the fine ceramic particles, rinsing the particles, and drying the particles.