Using Fe(Si) alloy particles as deposition basement materials and tetraethoxysilane as gas SiO2 precursor, Fe(Si)/SiO2 composite powders were synthesized under fluidized vapor deposition. The influence of Ar dilution gas flow rate on deposition process of SiO2 insulating medium, and the formation Ar dilution gas flow rate range of complete Fe(Si)/SiO2 core-shell heterostructure were investigated. The results showed that the microstructure of SiO2 insulating medium on the Fe(Si) particle base surface varied from submicron clusters to integrated films to porous films with the increasing of Ar dilution gas flow rate during a fluidized vapor deposition process, while the deposition rates SiO2 insulating medium first decreased, then increased and decreased again. The homogeneity of the SiO2 insulating medium was the best and the deposition rate was 0.069 nm/s when the Ar dilution gas was at a flow rate of 250 sccm. In addition, when reaction temperature, reaction time, gas SiO2 precursor content and carrier gas flow rate was 930 K, 60 min, 9 mL and 100 sccm respectively, the conversion from Fe(Si) alloy particles to complete Fe(Si)/SiO2 core-shell heterostructure particles during the fluidized vapor deposition occurred within the Ar dilution gas flow rate range from 200 sccm to 300 sccm. The results of the performance test indicated that the Fe(Si)/SiO2 core-shell heterostructure led to a substantial enhancement in the electrical resistivity of the particles and reduction in their saturation magnetization, but hardly affected the coercive force. Compare to Fe(Si) alloy particles, the Fe(Si)/SiO2 core-shell heterostructure particles exhibited much higher electrical resistivity. The varying trend of Fe(Si)/SiO2 core-shell heterostructure particles was consistent with the deposition rate of SiO2 insulating medium. The results in this study may provide a foundation for future kinetics investigations and the application of fluidized vapor deposition technology.