Fabrication of a ferromagnetic composite powder for the magnesium and BaFe12O19 system by mechanical alloying (MA) is investigated at room temperature. Mixtures of Mg and BaFe12O19 powders with a weight ratio of Mg:BaFe12O19 = 4:1, 3:2, 2:3 and 1:4 are used. Optimal MA conditions to obtain a ferromagnetic composite with fine microstructure are investigated by X-ray diffraction, differential scanning calorimetry (DSC) and vibrating sample magnetometer (VSM) measurement. It is found that Mg-BaFe12O19 composite powders in which BaFe12O19 is dispersed in Mg matrix are successfully produced by MA of BaFe12O19 with Mg for 80 min. for all compositions. Magnetization of Mg- BaFe12O19 composite powders gradually increases with increasing the amounts of BaFe12O19, whereas coercive force of MA powders gradually decreases due to the refinement of BaFe12O19 powders with MA time for all compositions. However, it can be seen that the coercivity of Mg-BaFe12O19 MA composite powders with a weight ratio of Mg:BaFe12O19=4:1 and 3:2 for MA 80 min. are still high, with values of 1260 Oe and 1320 Oe compared to that of Mg:BaFe12O19=1:4. This clearly suggests that the refinement of BaFe12O19 powders during MA process for Mg:BaFe12O19=4:1 and 3:2 tends to be suppressed due to ductile Mg powders.