Fe-Mg granular films with different Fe content were made using thermal evaporation. It is found that the Fe content, the magnetic properties, and microstructures of the Fe-Mg films vary with the amount of argon pressure used during the evaporation. The highest coercivity, He, was obtained in a film with about 60 wt % Fe, containing Fe particles with a size 13-15 nm. In all the films examined, Fe nanoparticles with a size of a few to 20 nm were observed to lay on Mg layered crystals which were as large as hundreds of nanometers.