An optimum route to fabricate the ferrous alloy dispersed nanocomposites such as /Fe-Ni and /Fe-Co with sound microstructure and desired properties was investigated. The composites were fabricated by the sintering of powder mixtures of and nano-sized ferrous alloy, in which the alloy was prepared by solution-chemistry routes using metal nitrates powders and a subsequent hydorgen reduction process. Microstructural observation of reduced powder mixture revealed that the Fe-Ni or Fe-Co alloy particles of about 20 nm in size homogeneously surrounded , forming nanocomposite powder. The sintered /Fe-Ni composite showed the formation of Fe phase, while the reaction phases were not observed in /Fe-Co composite. Hot-pressed /Fe-Ni composite showed improved mechanical properties and magnetic response. The properties are discussed in terms of microstructural characteristics such as the distribution and size of alloy particles.