If composites made of conductive particles embedded in a nonconductive matrix are subject to highly dynamic magnetization processes, then microscopic eddy currents may lead to high magnetodynamic losses and heating of the material. Less obvious, the microscopic eddy currents also induce a dynamic macroscopic magnetization in accordance with Lenz’ law. Conventional homogenization theories based on volume averaging of the magnetic field strength disregard this effect and thus fail to properly predict the dynamic material response. In this work, the variationally consistent homogenization framework by Larsson et al. (2010), originally developed for transient heat conduction, is transferred to the aforementioned particulate composites, in order to properly reproduce this dynamic effect. It turns out that this approach predicts the macroscopic magnetization to be the volume averaged sum of the particles’ (conventional) magnetization and a non-standard dynamic magnetization due to microscopic eddy currents. Some first numerical examples illustrate the improved predictability of the variationally consistent homogenization method with respect to experimental complex permeability data. The resulting theory is shown to exhibit a two-scale incremental potential structure, which is exploited in several ways.