The paper describes a project with the aim to develop communicating and functional cast iron components in smart systems. The concept is based on sensors integrated into cast iron components; this will influence not only the component but also the casting process. Among the technical challenges is how to choose a sensor solution that cost-efficiently and with minimal environmental impact can be integrated into the component during the casting process, and especially without being damaged during mold filling and the high pouring temperature. Another challenge is how the iron will interact and interfere with sensor signals and whether an insulating intermediate material is needed or not. Integrating the sensors into the casting makes sensors a natural part of the component, which in turn can lead to more resource efficient designs, increased value added for the casting sector, and a general access to different possibilities of digitalization. The integrated sensors can be used for effective control and monitoring of components when in service and give information about for example how the component is used and what conditions it is exposed to. In other words, the component can tell when maintenance is needed or in worst cases, indicate that something is wrong before a failure will happen. Important measurands can e.g. be elongation, shear, temperature and vibration. Different combinations of sensor materials and insulating materials and their interaction with the cast iron have been investigated. It is shown how the interaction at the interface affects the microstructure and consequently the properties of the cast iron. In the case of insulating materials it is e.g. shown how air gaps are formed and in the case of sensor materials it is shown how a diffusion zone is formed and how this zone depends on the sensor material. How this diffusion zone affects the microstructure is discussed.