Homing pigeons have been subject of various studies trying to detect magnetic material which might be involved in magnetic field perception. Here we focus on the upper-beak skin of homing pigeons, a region that has previously been shown to contain nerves sensitive to changes of the ambient magnetic field. We localized Fe3+ concentrations in the subcutis and identified the material by transmission electronmicroscopy (TEM) as aggregates of magnetite nanocrystals (with grain sizes between 1 and 5 nm). The particles form clusters of 1-3 microm diameter, which are arranged in distinct coherent elongated structures, associated with nervous tissue and located between fat cells. Complementary low-temperature magnetic measurements confirm the microscopic observations of fine-grained superparamagnetic particles in the tissue. Neither electron-microscopic nor magnetic measurements revealed any single-domain magnetite in the upper-beak skin tissue.