Within the field of crystal growth it is recognized that secondary species can sometimes be occluded within a growing crystal according to the crystallization conditions and pairing of the additive and host crystal. This article takes inspiration from this phenomenon to create multifunctional inorganic nanocomposites with unique structures: inorganic single crystals containing embedded inorganic nanoparticles. Using magnetite (Fe3O4)/ZnO as a suitable test system, ZnO crystals are precipitated from aqueous solution at 90 °C and atmospheric pressure in the presence of Fe3O4 nanoparticles functionalized with anionic diblock copolymers. Analysis of product nanocomposite crystals using atomic absorption spectroscopy shows that the Fe3O4 nanoparticles are embedded within the ZnO single crystal hosts at levels of approximately 10 wt %, and TEM analysis shows that there is no apparent discontinuity between the nanoparticles and host crystal matrix. Importantly, we then demonstrate that this occlusion approach can also be employed under hydrothermal conditions at 160 °C, without a loss in incorporation efficiency. This offers an important advance on our previous occlusion studies, which were all conducted at room temperature, and vastly increases the range of target materials that can be generated using our synthesis approach. Finally, measurement of the magnetic properties of these nanocomposites shows that they retain the attractive features of the wide band gap semiconductor ZnO while benefiting from added magnetism.