The evolution of the structural and magnetic properties of metal-ceramic, cermet, nanocomposite powders, consisting of Co and α-Al2O3 in different proportions, prepared by ball milling has been investigated. The overall microstructure of the system, after long-term milling, is found to be very sensitive to the amount of α-Al2O3, yielding a less refined and faulted hexagonal-close-packed (hcp)-Co structure for the sample with larger α-Al2O3 percentage. The increased presence of the ceramic counterpart also causes a delay of the face-centered-cubic (fcc) to hcp-Co stress-induced transformation during ball milling. The results seem to indicate an evolution of the role of α-Al2O3, from increasing locally the strain rate of the mechanical work for small amounts of ceramic to absorbing milling energy for large amounts of α-Al2O3. The magnetic properties correlate with the obtained microstructure, where the amount of hcp-Co and stacking faults and the isolation of the Co particles by the α-Al2O3 control the coercivity. © 2007 Materials Research Society.