Abstract: A magnetic alloy with ultrafine crystal grains having a composition represented by the general formula:Co.sub.100.sub.-x-y-z-a-b Fe.sub.a M.sub.x B.sub.y X.sub.z T.sub.b (atomic %)wherein M represents at least one element selected from Ti, Zr, Hf, V, Nb, Mo, Ta, Cr, W and Mn, X represents at least one element selected from Si, Ge, P, Ga, Al and N, T represents at least one element selected from Cu, Ag, Au, platinum group elements, Ni, Sn, Be, Mg, Ca, Sr and Ba, 0<a.ltoreq.30, 2.ltoreq.x.ltoreq.15, 10.ltoreq.y.ltoreq.25, 0.ltoreq.z.ltoreq.10, 0<b.ltoreq.10, and 12<x+y+z+b.ltoreq.35. Such a magnetic alloy can be produced by producing an amorphous alloy having the above composition, and subjecting the resulting amorphous alloy to a heat treatment to cause crystallization, thereby providing the resulting alloy having a structure, at least 50% of which is occupied by crystal grains having an average grain size of 500 .ANG. or less.