Single crystal particles of alpha-GdC2 have been encapsulated into carbon polyhedral shells by the carbon arc-discharge technique. These particles range in size from 20 to 50 nm and are paramagnetic in nature. The phase and stoichiometry of these crystals have been determined using a combination of techniques, such as X-ray diffraction and high-resolution electron microscopy. As reported for alpha-LaC2 earlier, the crystal structure of bulk alpha-GdC2 is also tetragonal, and it is metallic and undergoes hydrolysis. However, the encapsulation of the nanoscale crystals in carbon shells prevents their hydrolysis indefinitely. These nanometer-sized particles, which can be preferentially extracted using powerful magnetic fields, may have useful applications in several fields of science.