Nanocrystalline Fe–6P–1.7C powders were prepared by mechanical alloying from elemental Fe, P and C powders in a high energy planetary ball-mill P7 under argon atmosphere. Phase transformations, morphological changes, thermal stability, magnetic properties and microhardness evolution were studied by X-ray diffraction, scanning electron microscope, differential scanning calorimetry, vibrating sample magnetometer and Vickers microhardness. The Rietveld refinement of the X-ray diffraction pattern reveals the formation of disordered Fe(P) and Fe(C) solid solutions and Fe 2 P phosphide after 9h of milling. On further milling (50h), Fe 3 P, Fe 3 C and Fe(P,C) phases are formed when the total mixing of the elemental powders is achieved at the atomic level. The crystallite size reduction down the nanometer scale (∼9nm) is accompanied by the introduction of internal strains up to 1.8% (root-mean square strain, rms). The mixing kinetics of the elemental powders can be described by an Avrami parameter n=1.5. The saturation magnetization and coercivity values are of about 157.3emu/g and 80Oe, respectively, after 24h of milling.