In ammonium perchlorate (AP) based composite propellants, α-Fe₂O₃ nanoparticles and hydroxyl terminated polybutadiene (HTPB) are commonly used as catalyst and binder respectively. Their properties and dispersion significantly affect the combustion performance of the composite propellants. However, α-Fe₂O₃ nanoparticles are hard to disperse uniformly in the binder HTPB owing to the high viscosity, which will decrease their catalytic activity. Directly composite processing of α-Fe₂O₃ nanoparticles with other main components of composite propellants may be an effective strategy to prevent from aggregation without introducing other components to the solid propellant at the same time. In this paper, the α-Fe₂O₃/ (IPDI-HTPB) composite nanoparticles were prepared by choosing curing agent isophorone diisocyanate (IPDI) as grafting bridge. The typical procedure was as follows: (1) The first step was to synthesize IPDI-HTPB. In order to adjudged the reaction terminal point of IPDI and HTPB, the reaction kinetics of HTPB and IPDI were first researched and the proper reaction conditions were chosen as follows:molar ratio of HTPB and IPDI is 1:1, reaction temperature is under 80℃ and reaction time is 2 h. (2) The second step was to synthesize α-Fe₂O₃/(IPDI-HTPB) composite nanoparticles. Firstly, the stoichiometric α-Fe₂O₃ nanoparticles were dispersed in toluene under ultrasound for 10 min. Secondly, the mixture were added in the above IPDI-HTPB solution and the reaction kept for 4 h. Thirdly, the α-Fe₂O₃/(IPDI-HTPB) composite nanoparticles were centrifuged and washed with toluene and ether for several times. Finally, α-Fe₂O₃/(IPDI-HTPB) composite nanoparticles were dried in the oven at 80℃ for 12 h. (3) The structure of α-Fe₂O₃/(IPDI-HTPB) composite nanoparticles were characterized by X-ray diffractometer (XRD), transmittance electron microscopy (TEM), Fourier transform infrared spectrometer (FTIR) and thermogravimetric analysis (TGA). It was observed that HTPB could be chemically coated on the surface of the α-Fe₂O₃ nanoparticles by the grafting activity of IPDI. The depth of the IPDI-HTPB was nearly 5 nm. The α-Fe₂O₃/(IPDI-HTPB) composite nanoparticles showed hydrophobicity after the composite process. Compare with the pure α-Fe₂O₃ nanoparticles, α-Fe₂O₃ nanoparticles in α-Fe₂O₃/IPDI-HTPB composite nanoparticles showed better catalytic activity on the thermal decomposition of AP.