Microstructure of Nd-Fe-Co-Ga-B hot-deformed magnet improved by the Dy diffusion treatment was investigated with high-resolution scanning electron microscopy (HRSEM), analytical transmission electron microscopy (ATEM) and high angle annular dark field-scanning transmission electron microscopy (HAADF-STEM). It was found that Dy diffuses along the thin grain boundary (GB) phase between Nd-2(Fe,Co)(14)B grains, and then the Dy substitutes for a part of Nd near the surface of the Nd-2(Fe,Co)(14)B grains. Consequently, two-layered-wrapping structure of thin GB phase and thin (Nd,Dy)(2)(Fe,Co)(14)B layer is formed on each Nd-2(Fe,Co)(14)B grain. Moreover, the Dy substitution occurs preferentially at the Nd-sites of a-planes compared with that of c-planes in the Nd-2(Fe,Co)(14)B grains. These results indicate that the Dy diffusion treatment improves significantly the coercivity by forming the thin (Nd,Dy)(2)(Fe,Co)(14)B layer on the surface of Nd-2(Fe,Co)(14)B grains, although the treatment leads to grain growth and deterioration of the c-axis alignment of Nd-2(Fe,Co)(14)B grains. (c) 2012 Elsevier B.V. All rights reserved.