Nanostructured Fe-Co based alloys are believed to be good candidates for imparting improved magnetic behavior in terms of higher permeability, lower coercivity, reduced hysteresis loss and higher Curie temperatures. In the present work, Fe-Co alloys with Ni additions were prepared using mechanical alloying (MA). Grain size and internal strain in the MA powders was measured using X-ray diffraction. It has been shown that the grain size could be reduced down to less than 5 nm in these alloys. Nanocrystalline materials thus obtained were also evaluated for magnetic behavior and the influence of grain size and internal strain on the magnetic properties has been discussed.