Conventional Fe-Co alloys are important soft magnetic materials that have been widely used in industry. Compared to its polycrystalline counterpart, the nanostructured materials have showed superior magnetic properties, such as higher permeability and lower coercivity due to the single domain configuration. However, magnetic properties of nanostructured materials are affected in complicated manner by their microstructure such as grain size, internal strain and crystal structure. Thus, studies on synthesis of nanostructured materials with controlled microstructure are necessary for a significant improvement in magnetic properties. In the present work, starting with two powder mixtures of Fe and Co produced by mechanical alloying (MA) and hydrogen reduction process (HRP), differences in the preparation process and in the resulting microstructural characteristics will be described for the nano-sized Fe-Co alloy particles. Moreover, we discuss the effect of the microstructure such as crystal structure and grain size of Fe-Co alloys on the magnetic properties.