Two-phase hard magnetic Nd2Fe14B/alpha-Fe nanocomposites and nanocrystalline TiFe electrode materials were prepared by mechanical alloying and heat treatment. The microstructure of both types of functional nanomaterials was investigated by atomic force microscopy. In the case of Nd2Fe14B magnetic phase, the microstructure refinement was realised by careful heat treatment and Zr addition. AFM investigations showed that Zr reduces a grain size of a parent alloy in the range of 20-40%. More than 90% grains have size below 50 nm, and more than 50% grains have size below 20 nm, which results in enhanced remanence. On the other hand, in TiFe alloy, a fine microstructure is known to improve greatly the properties of hydrogen storage alloys, when compared with their conventional polycrystalline counterparts. Additionally, the substitution of Fe by some amount of nickel improves the activation property of TiFe. Two types of AFM imaging modes, height and deflection, are accurate for agglomerate and grain size presentation, respectively. (C) 2004 Kluwer Academic Publishers.