The electronic structure and magnetic properties of the graphene/Fe/Ni(111) system were investigated via combination of the density functional theory calculations and electron-spectroscopy methods. This system was prepared via intercalation of thin Fe layers (1 ML) underneath graphene on Ni(111) and its inert properties were verified by means of photoelectron spectroscopy. Intercalation of iron in the space between graphene and Ni(111) changes drastically the magnetic response from the graphene layer that is explained by the formation of the highly spin-polarized 3dz2 quantum-well state in the thin iron layer.