The phase evolution and magnetic properties of melt-spun Nd-9.5(Fe1-xCox)(85.5)B-5(x=0, 0.05, 0.1, and 0.15) nanocomposites have been investigated. It was found that Co substitution for Fe, i.e., x = 0.05-0.15, improves the Curie temperature (T-c), remanence (B-r), and maximum energy product (BH),, of the materials obtained. Co substitution for Fe was found to promote grain coarsening, after thermal processing, in materials with a high Co concentration. Wohlfarth remanence analysis suggests that dilute-Co substitution for Fe increases the strength of the exchange coupling between the soft magnetic phases, alpha-(Fe, Co) and Nd-2(Co, Fe)(17), and the 2:14:1 phases. The increase in the saturation magnetization of alpha-(Fe, Co) and 2:14:1 phase, in conjunction with the enhanced exchanged coupling, presumably, result in an increased (BH)(max) of Nd-9.5(Fe0.95Co0.05)(85.5)B-5 and Nd-9.5(Fe0.90Co0.10)(85.5)B-5 samples. Once above a critical Co concentration, for the compositions studied, the strength of exchange coupling interactions between magnetically soft and hard phases does not seem to vary significantly with Co content. Moreover, both the irreversible loss of induction and reversible temperature coefficient of induction (conventionally referred to as alpha) of fully processed materials decrease with increasing Co concentration. (C) 1998 American Institute of Physics.