Phase transformations and magnetic properties of multiphase Nd4.3Fe76.2B19.5 alloy were investigated in the temperature range of heat treatment 600-700°C. The influence of different heat treatment regimes was observed by correlation of phase composition and measured magnetic properties. The heat treatment regime, which provided the microstructure that improves exchange interactions between grains of soft and hard magnetic phases and consequently enhances magnetic properties, was defined and discussed. For optimized magnetic alloy grain size of the present phases Fe3B, Nd2Fe14B and α-Fe was calculated by size-strain analysis of X-ray powder diffraction data. Calculated mean grain size was on a nanoscale, below 30 nm.