In this study, polymer-grafted magnetic nanoparticles containing chromium(III) ions incorporated onto Fe3O4/mercaptopropanoic acid-poly(2-hydroxyethyl acrylate) was prepared via a simple and in situ method. The obtained magnetic nanocomposite exhibited high catalytic activity and excellent selectivity in direct hydroxylation of benzene in the presence of hydrogen peroxide under solvent-free condition. The magnetic catalyst could be also separated by an external magnet and reused seven times without any significant loss of activity/selectivity. Due to the Lewis acidity of the Fe3+ groups in the structure of magnetic nanoparticles, the high efficiency of this catalyst is possibly due to the synergetic effect of Cr3+ and Fe3+ groups in the structure of magnetic nanocomposite. © 2014 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2014, 131, 40383.