Abstract: This invention relates to a rare earth containing multicomponent magnetic alloy powder consisting of no less than six components. During its preparation by reduction and diffusion process, one or more than one dispersing agent is added to the mixture of starting materials so that the allowable range of operational parameters is widened, the stability of product quality improved and the production cost reduced. Extensive studies have been made on the behavior of copper and calcium during processing making it possible to make precise compositional control of the final product. Rare earth permanent magnetic alloy powder of the R.sub.2 Co.sub.17 type prepared in accordance with the method of this invention ensures satisfactory quality and consistency.