The magnetic composite materials that consist of transparent matrix and magnetic fine particles are expected to have large residual magnetization and coercive force because of their fine magnetic domain structure, and also to show magneto-optical effects. Silica gels containing magnetite (Fe3O4) fine particles were prepared by sol-gel method. The magnetic, optical and magneto-optical properties of the composites were investigated by measurements of magnetization curves, UV-visible spectra and Faraday rotation in visible range. The saturation magnetization of the composite was almost as same as that expected from the amount of magnetite fine particles in it. Although the composites had large and broad absorption at around 400 nm, they still maintained their transparency. The origins of decrement of transparency attributed to the optical absorption of magnetite and scattering due to magnetite fine particles. The whole composites showed positive Faraday rotation under external static magnetic field due to the large contribution of diamagnetic silica gel matrix. Magnetite contributed negative Faraday rotation with maximum at around 470-480 nm to the magneto-optical spectra of the composites.