Metal powders of the composition 70 at% Cu and 30 at% Fe were produced by high energy mechanical alloying of the elemental powders. The powders were processed in a Spex 8000 mixer/mill for various times to investigate the potential of the mechanical alloying process for producing nano-composite structures with modified magnetic properties. Optical microscopy revealed a layered structure of alternating copper and iron that developed upon milling. The spacing between the layers decreased with milling time, becoming optically unresolvable (< 1 μm) after four hours of milling. A single profile x-ray diffraction profile shape analysis technique was used to determine the average diffracting particle size of the copper and iron phases. The diffracting particle size decreases with alloying time reaching values of 7.5 nm and 2 nm, for copper and iron respectively, after eight hours of alloying. The magnetic coercivity increased with milling time initially, reaching a maximum value above 300 Oe after six hours of milling. These results are discussed and compared to results obtained in Ag/Fe and Cu/Fe nano-composite films.