Abstract: Nanometer-sized metal clusters were prepared inside single crystalline MgO films by vacuum co-deposition of metals and MgO. The atomic structure was studied by high-resolution electron microscopy (HREM) and nm-area electron diffraction. The size of the clusters is ranging from 1 nm to 3 nm without those larger than 5 nm, and most of them have definite epitaxial orientations with the MgO matrix films. The character of the composite films is very much useful for the studies of various kinds of physical properties with anisotroPy. The physical properties such as electric transport, magnetic, optical absorption, sintering and catalytic ones were thus measured on the same samples analyzed by HREM by using high sensitivity apparatus with interest of clarifying the retationship between the atomic structure and physical properties