By using a supercooled liquid (two-stage) quenching method, in which supercooled liquid droplets produced by high-pressure gas atomization are flattened at high kinetic energies on a rapidly rotating wheel, flaky amorphous powders with a thickness of 1-3 mu m and a large aspect ratio of 20-300 were produced for an Fe85Zr8B6Cu1 alloy. This is in contrast to the result that spherical powders produced only by high-pressure gas atomization consist of amorphous, bcc and compound, even in the particle size range below 25 mu m. The amorphous powder changes to a mostly single bcc phase by annealing for 3.6 ks at 873 K, and the further rise in annealing temperature causes the mixed structure of alpha-Fe + Fe-3(Zr,B). The annealed flaky powders with the bcc phase exhibit soft magnetic properties of 140 emu g(-1) for saturation magnetization sigma(10k) and 0.6 Oe for coercivity, H-c. The composite made from the bcc flaky powders and phenol resin at a weight ratio of 9:1 has a high degree of laminated structure. The composite also exhibits soft magnetic properties of 5.3 kG for B-100, 150 for mu(max) and 1.1 Oe for H-c. The B-100 value is 2.1 times as high as that for the composite of amorphous Co-Fe-Si-B flaky powders and resin. Thus the present composite is expected to be used in applications which require both high saturation magnetization and soft magnetic properties, which cannot be obtained for the composites made from amorphous Co- and Fe-based flaky powders.