49Fe-49Co-2V pre-alloyed powder was mechanically milled in Methanol for 60 hours. The morphology and microstructure of the as-received and milled powders were characterized by scanning electron microscopy, X-ray diffraction, transmission electron microscopy and thermal analysis. Plastic deformation of about 440% was achieved in the powders milled for 60 hours. The average grain size was found to be 35 nm after milling of 20 hours and it kept essentially constant on further milling up to 60 hours. On the basis of the observations of particle size and morphology, it is suggested that the mixing, caused by overlapping, cold welding and fracturing among particles, did not play an important role in the milling of 49Fe-49Co-2V powder. No new phases were formed during milling process, however, milling enhanced the 550 degreesC anomaly.