The structural and magnetic properties of nanocrystalline alloy powder Co40Fe10Zr10B40 prepared by mechanical alloying have been characterized by using x-ray diffraction (XRD), scanning electron microscope (SEM), vibrating sample magnetometer (VSM) and differential scanning calorimeter (DSC). It is shown the crystallite size has been decreased significantly to about 15 nm after 8 h milling time. On continuing the milling time mechanical crystallization and subsequently the alloying process were noticed up to 190 h. Saturation magnetization decreased during the whole process while coercivity achieved the highest value at the crystallization stage. Post treatment of milled powder at 190 h revealed crystalline constituent elements.