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• Nanostructure formation in pseudo-binary FeNi-based soft magnetic alloys with suppressed non-magnetic additives that enabled higher saturation magnetization. • Role of thermal processing and impacts of different heating rates on magnetic properties of conventionally and rapidly annealed alloys. • Preferential FCC phase formation under high heating rates achieved via flash annealing techniques. • Remarkable grain size refinement and optimal soft magnetic properties. The resulting nanocomposite microstructures of FeNi nanocrystallites under different heating and cooling rates (5 °C/min vs 400–500 °C/s) is investigated. Conventional furnace annealing under low heating rates and slow cooling resulted in both BCC α FeNi and FCC γ FeNi nanocrystallites with an average grain size on the order of 25–27 nm whereas high heating rates achieved via flash annealing techniques have enabled a dramatically refined microstructure consisting of 5–7 nm grains with FCC γ FeNi phase and found to be the dominant phase following primary crystallization. Grain size refinement and phase identity optimization yielded low values of coercivities ∼17 A/m and high permeability ∼11 × 103 measured at 400 Hz/1 kA/m in flash annealed samples at 450 °C for 5 s. The magnetic behavior and the underlying mechanism of optimal soft magnetic properties are discussed in terms of the critical role of the grain size in domain wall pinning and coercivity. [Display omitted]. [ABSTRACT FROM AUTHOR]