Processing and properties of composites with Ni-Fe content of 10 and 15 wt% were investigated. Homogeneous powder mixtures of /Ni-Fe alloy were prepared by the solution-chemistry route using , and powders. Microstructural observation of composite powder revealed that Ni-Fe alloy particles with a size of 20nm were homogeneously dispersed on powder surfaces. Hot-pressed composites showed enhanced fracture toughness and magnetic response. The properties are discussed based on the observed microstructural characteristics