A modified hydrogenation–disproportionation desorption-recombination (HDDR) process consisting of (i) solid disproportionation and (ii) slow recombination under partial hydrogen pressure has been applied to a Nd 16.2Fe 78.2B 5.6 alloy. Scanning electron microscopy shows that an initially fine rod-like structure of NdH 2± x and Fe observed after 15 min of hydrogenation at 900°C is transformed into a granular morphology with prolonged annealing. Simultaneously, finely dispersed tetragonal Fe 3B particles of 10–50 nm diameter exist. XRD studies show that this metastable Fe 3B phase is transformed to Fe 2B and Fe on further annealing. Short solid-disproportionation times result in a higher degree of anisotropy after recombination, whereas long annealing times and conventional processing lead to isotropic material. It is concluded that the formation of the intermediate tetragonal Fe 3B phase after solid disproportionation is pivotal for the inducement of texture in HDDR processed ternary NdFeB-type alloys.