Magnetic properties of nanocrystalline Fe60Cr40 powders prepared by mechanical alloying in vacuum and air were investigated by utilizing the measurements of magnetization, X-ray diffraction, and 57 Fe Mossbauer spectrum. The results show that the Fe60 Cr40powders keep the bcc structure during milling in air and vacuum. The saturation magnetization of the Fe60 Cr40 powders milled in vacuum and air decreases with the increase of the milling time up to 45 h. The decrease of saturation magnetization of the Fe60 Cr40 powders milled in vacuum is due to the formation of Fe-Cr solid solution, while in air it is due to the formation of paramagnetic disorder structure and solid solution.