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We developed a high-performance milling process with a grooved mill pot. The milling process is able to make highly transparent dispersed materials. Bi1.8Y1.2Fe5O12 nanoparticles were prepared with coprecipitation and annealing processes. The nanoparticle dispersed films were prepared with the milling process and a conventional process. The crystallite sizes of the Bi1.8Y1.2Fe5O12 particles in the milled films were 40-50 nm. These sizes were about half that of the films prepared by conventional process. The films containing the particles show high transparency. The light-absorption coefficients of the films were about half that of the films prepared by the conventional process. Magnetooptical properties were also improved. The milling process produces films with a high figure of merit, which is the value of Faraday rotation angle divided by light-absorption coefficient. The milling period was shorter than that of the conventional process.