High magnetization materials are in great demand for the fabrication of advanced multifunctional magnetic devices. Notwithstanding this demand, the development of new materials with these attributes has been relatively slow. In this work, we propose a new strategy to achieve high magnetic moments above room temperature. Our material engineering approach invoked the embedding of magnetic nanoclusters in an oxide matrix. By precisely controlling pulsed laser deposition parameters, Co nanoclusters are formed in a 5 at % Co-TiO2 film. The presence of these nanoclusters was confirmed using transmission electron microscopy, energy-dispersive X-ray spectroscopy, and X-ray absorption fine structure. The film exhibits a very high saturation magnetization of 99 emu/cm3. Detailed studies using X-ray magnetic circular dichroism confirm that Co has an enhanced magnetic moment of 3.5 μB/atom, while the Ti and O also contribute to the magnetic moments. First-principles calculations supported our hypothesis that the metallic Co nanoclusters surrounded by a TiO2 matrix can exhibit both large spin and orbital moments. Moreover, a quantum confinement effect results in a high Curie temperature for the embedded Co nanoclusters. These findings reveal that 1-2 nm nanoclusters that are quantum confined can exhibit very large magnetic moments above room temperature, representing a promising advance for the design of new high magnetization materials.