The effect of additive Zr on the microstructure and magnetic properties of nanocomposite Sm2Fe15Ga2Cx/α-Fe permanent magnet has been investigated. A few percent of Zr addition was found to improve significantly its magnetic properties. After an appropriate heat treatment, the remanence, intrinsic coercivity, and maximum energy product increase from 6.4 kG, 5.5 kOe, and 5.6 MGOe for the Zr-free sample to 7.2 kG, 7.7 kOe, and 9.0 MGOe for the Zr-containing one, respectively. The significant improvements of magnetic properties originate from the microstructure refinement by introducing Zr. The “exchange-spring” behavior and the exchange-coupling between the magnetically hard phase Sm2Fe15Ga2Cx and the soft one α-Fe are discussed as well. © 1998 American Institute of Physics.