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The magnetism of ultrasmall Co:CoO core-shell nanoclusters is investigated. The structures, produced by cluster-beam deposition, have Co core sizes ranging from 1 to 7 nm and a CoO shell thickness of about 3 nm. Hysteresis loops as well as zero-field-cooled and field-cooled magnetization curves have been measured and a striking feature of the nanostructures is the existence of proteretic (clockwise) rather than hysteretic loops in the core-size range from 3 to 4 nm. The proteretic behavior and its particle-size dependence reflect a subtle interplay between various anisotropies and exchange interactions in the Co and CoO phases and at the Co–CoO interface.