Carbo-Iron – a novel composite material is presented, which consists of nanoscale zero-valent iron (nZVI) clusters on activated carbon colloids (ACC). The material is especially designed for the in situ generation of reactive zones and contaminant source removal when applied in groundwater remediation processes. This paper deals with the tailored synthesis of the composite material to create a reducing agent with properties optimized for subsurface transport of the particles and improved source affinity when compared to pure nZVI. Various iron precursors and impregnation methods are discussed with regard to their influence on the material properties. The impregnated ACCs were reduced by either H₂ or C/CO in order to achieve the desired Carbo-Iron colloids. By means of thermogravimetric analysis the optimal reduction temperatures were determined for H₂ (500 °C) and for the carbon carrier material (700 °C) as reducing agent. For stabilization of the initially generated pyrophoric highly dispersed iron nanoclusters various approaches were studied in order to generate an air-stable material without significant loss of metallic iron. Stabilization with traces of gaseous HCl gave the best results. Finally, the influence of the nZVI and residual iron oxide deposits on the sorption properties of the ACC carrier is discussed.