The influence on the structural and magnetic properties of pre-alloyed gas-atomized Fe49Co49V2 powders during mechanical milling was investigated. The powders were mechanically milled for up to 45 h. The powders, before milling, were principally comprised of α-phase. No noticeable phase transformation was observed during mechanical milling of the pre-alloyed powders. Mechanical milling resulted in a gradual decrease in crystallite size to as low as ~10 nm, accompanied by an increase in lattice strain to ~1.2–1.5%. Mechanical milling led to an appreciable reduction in the particle size while the morphology of the milled powders appeared similar once the steady-state was attained. The lattice parameter of the nanostructured powders at steady-state was estimated as 0.2857 ± 0.0004 nm. The saturation magnetization (MS) of the nanostructured powders milled for ~45 h was ~211 ± 1 Am2/kg, and it decreased only by ~6% compared to that of the pre-alloyed gas-atomized powders before mechanical milling. The intrinsic coercivity (HCI) of the pre-alloyed powders was estimated as ~1.4 ± 1% kA/m. The HCI peaked to ~8.4 kA/m during the initial stages of milling and subsequently remained between ~6.5 kA/m to ~6 kA/m, during the later stages of milling. As would be expected, the HCI was strongly dependent on the crystallite size. The ferromagnetic exchange length of the nanostructured powders was estimated to be ~27 nm. The magnetic properties of nanostructured Fe49Co49V2 powders obtained by mechanical milling of pre-alloyed powders had relatively superior magnetic properties compared to the nanostructured powder obtained by mechanical alloying of the constituent elemental powders.