In the present study, the magnetostructural transition, magnetocaloric effect (MCE) and critical behavior of Nd(Co0.8Fe0.2)2 alloy in the vicinity of ferromagnetic transition were studied. The Rietveld refinement analysis of in-situ synchrotron XRD patterns reveals that the present alloy crystallizes in the cubic phase (space group Fd3̅m) at room temperature and undergoes a structural transition to the tetragonal phase (space group I41/amd) below its Curie temperature. Temperature dependent heat capacity measurements under different applied magnetic fields were carried out to investigate the magnetocaloric properties. The maximum magnetic entropy change (ΔSM) of 5.6 J/kgK and relative cooling power (RCP) of 445.7 J/kg are obtained over the wide working temperature range of 82 K under magnetic field change of 5 T. The corresponding adiabatic temperature change (ΔTad) is evaluated to be 2.9 K under the same magnetic field change. The sample shows metallic behavior with its significant magnetoresistance value of −41.2% around phase transition at magnetic field change of 5 T. These results may make Nd(Co0.8Fe0.2)2 alloy as one of the promising material for refrigeration applications. Moreover, the critical parameters (β, γ, and δ) were deduced independently from the magnetization data by using different techniques such as modified Arrott plot, Kouvel–Fisher method and critical magnetization isotherms. The derived β=0.319, γ =1.214, and δ=4.78 values are found to be consistent with the 3D-Ising class signifying the presence of short-range exchange interactions in this alloy. We have further shown that these exponents follow the M(H, ε)=|(T − TC)/TC |βf±H/|(T − TC)/TC|β+γ scaling equation very well for both the above and below Curie temperature demonstrating that the estimated exponents are unambiguous and are intrinsic to this alloy system.