We report a combination of analytical transmission electron microscopy, small angle neutron scattering, and studies of magnetic properties of the glass-forming alloy Nd60Fe30Al10. These investigations show the existence of an in situ formed finely dispersed nanocrystalline Nd-rich phase embedded in a Fe-rich glassy matrix of a bulk sample. The crystalline phase forms an extended network over the whole sample but its volume fraction is small compared to that of compact phase. Small angle neutron scattering data exhibit power law behavior with an exponent of -2.5 indicating the formation of a mass fractal. The microstructure observed may be related to phase separation in the undercooled liquid which induces a microstructure that can explain the hard magnetic behavior of such an intrinsic composite. © 2002 American Institute of Physics.