The effect of Al on the hyperfine fields and crystallization of NANOPERM alloy has been studied by introducing 2% Al for Fe in Fe88Zr7B4Cu1. Al is found to enhance the nucleation rate in these alloys. Mössbauer spectroscopic technique has been used to trace the effect of Al on the hyperfine interactions in the amorphous and nanocrystalline state of these alloys. The hyperfine field clearly shows the presence of Al both in the amorphous and the nanocrystalline phase. Magnetic measurements using VSM and also XRD, TEM and DSC studies have been used to support the conclusions derived using Mössbauer spectroscopy.