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We report an effective medium theory of magnetization reversal and hysteresis in magnetically interacting particles, where the intergranular magnetostatic interaction is accounted for by an effective medium approximation. We introduce two dimensionless parameters, λ and h0, that completely characterize the hysteresis in a ferromagnetic polycrystal when the grain size is much larger than the exchange length so that the exchange coupling can be ignored. The competition between the anisotropy energy and the intergranular magnetostatic energy is measured by λ, while the competition between the anisotropy energy and Zeeman's energy is measured by h0. The hysteresis loop, magnetostatic energy density, and anisotropy energy density calculated by using this theory agrees well with micromagnetic simulations. The calculations also reveal that the subnucleation field switching due to the magnetic field fluctuation is important when the magnet is not very hard, and that has been accounted for by a probability-based switching model.