Direction solidified Tb-Dy-Fe alloys exhibit excellent magnetostrictive properties. However, the applications of Tb-Dy-Fe alloys are limited by the brittleness of Laves phase (Tb,Dy)Fe2 leading to fracture failure and cracking failure. Herein, a novel sintered Tb-Dy-Fe/Dy-Cu compacts were designed and fabricated. The low-melting ductile DyCu phase as intergranular phase or a “binder” was formed in the sintered Tb-Dy-Fe/Dy-Cu compacts. The DyCu phase coated the matrix (Dy,Tb)Fe2 phase grains through a semi-coherent interface and improved the mechanical properties of sintered Tb-Dy-Fe/Dy-Cu compacts. The sintered Tb-Dy-Fe/Dy-Cu compacts showed 176 MPa in bending strength, 3.98 MPa·√m in fracture toughness, 71.3 MPa in tensile strength, and 1186 ppm in the magnetostriction. Compared with the direction solidified Tb-Dy-Fe alloys, significant improvement of mechanical properties was achieved in the sintered Tb-Dy-Fe/Dy-Cu compacts. Furthermore, the high magnetostriction of sintered Tb-Dy-Fe/Dy-Cu compacts was attributed to the<111>orientation which was obtained under an externally oriented magnetic field of 1 T during the forming process.