Results of magnetization, magnetotransport and Mossbauer spectroscopy measurements of sequentially evaporated Fe-Ag granular composites are presented. The strong magnetic scattering of the conduction electrons is reflected in the sublinear temperature dependence of the resistance and in the large negative magnetoresistance. The simultaneous analysis of the magnetic properties and the transport behavior suggests a bimodal grain size distribution. A detailed quantitative description of the unusual features observed in the transport properties is given.