Elemental powders of Cu (75wt%) and 316-stainless steel (25wt%) has been subjected to ball milling upto 70h followed by isothermal annealing at the temperature range of 350–750°C for 1h to investigate the microstructural evolution along with magnetic and mechanical properties. After 40h of milling, the bcc Fe is almost dissolved in the solid solution of Cu but no significant change has been observed in the XRD pattern after 70h of milling, Annealing of the alloy has resulted in precipitation of nanocrystalline bcc-Fe in Cu which triggers the soft ferromagnetic properties. The extensive mechanical characterization has been done at the microstructural scale by nanoindentation technique which demonstrates a hardening behavior of the compacted and annealed alloys due to possible precipitation of nanocrystalline bcc-Fe in Cu.