Nd/sub 2/Fe/sub 14/BH/sub x/, x/spl les/5, hydride powders, with particle size as small as 1 /spl mu/m, have been successfully prepared using a chemical method derived from the well-known oxide-reduction diffusion (ORD) method. In this method, the raw materials (Nd/sub 2/O/sub 3/, iron and boron) are mixed with calcium metal or hydride powder (in excess) and additions of anhydrous CaCl/sub 2/ and NaCl, and finally sintered at 1170-1270 K for a few hours under an argon atmosphere. This yields finely divided Nd/sub 2/Fe/sub 14/B crystallites embedded in the byproducts. The material is then washed with water at room temperature, where the excess Ca in the mixture reacts with water and produces nascent hydrogen, which reacts with the alloy particles embedded in the byproducts, and finally yields a well-separated Nd/sub 2/Fe/sub 14/BH/sub x/, x/spl les/5, hydride powder. Thermal stability, crystalline structure, and magnetic properties of several hydrided powders are studied systematically. These studies show that the interstitial hydrogen atoms led to 1) an increase in the lattice volume by as much as 4.2%, 2) a decrease in the coercivity to almost zero, 3) a dramatic improvement in T/sub C/ from 593 to 642 K, and 4) a substantial modification of the magnetization process, showing magnetic saturation at lower fields of /spl ap/60 kOe (against /spl ap/150 kOe in anhydride). >