We report the use of spark generation in an inert gas atmosphere to synthesize carbon-encapsulated metal nanoparticles (CEMNs) in a continuous aerosol manner using a metal (nickel, cobalt, iron)–graphite carbon electrode configuration without the use of a vacuum. The spark-generated particles consisted of CEMNs and carbonaceous aggregated debris. The outer layer of the CEMNs showed parallel fringes (ordered graphitic nanostructures) while the debris consisted of disordered nanostructures. Electron and X-ray diffraction showed that both metal and graphite in the CEMNs were the pure elements except for iron–carbon, which contained a carbide phase. Based on the order of the activation energies for carbon diffusion into a metal: iron–carbon (10.5–16.5 kcal mol−1) < cobalt–carbon (34.7 kcal mol−1) ∼ nickel–carbon (33.0–34.8 kcal mol−1), it was concluded that carbide particles form more easily from elemental iron than nickel or cobalt. The metal-to-carbon mass fractions of the spark-generated particles from nickel (anode)–carbon (cathode), cobalt–carbon, and iron–carbon spark configurations were 18.7, 28.3, and 11.2%, respectively, while the mass fractions for the configurations of metal (cathode)–carbon (anode) were 6.4, 9.1, and 4.3%, respectively. Similarly, the yield of CEMNs from the metal (anode)–carbon (cathode) electrodes was higher (54, 61, and 53%) than that of metal (cathode)–carbon (anode) electrodes (18, 30, and 18%).