Crystallization and phase evolution in an (Co97.5Fe2.5)89Zr7B4 amorphous alloy was studied by high temperature x-ray diffraction (HTXRD) and transmission electron microscopy (TEM). Co-based nanocomposite alloys have zero magnetostriction and a strong response to magnetic field annealing making them interesting for sensor and high frequency power applications. Amorphous alloys, synthesized by single roll melt-spinning, develop a nanocomposite structure after primary crystallization. After annealing at 540 °C for 1 h, TEM images and diffraction patterns confirm a grain size of 19 nm and the presence of at least two phases. HTXRD results show preferential body centered cubic (bcc) nucleation and formation of multiple phases at various stages of crystallization. Only the face centered cubic (fcc) phase remained at temperatures above 600 °C. On heating, the lattice parameter of the fcc phase increases at a rate higher than expected from thermal expansion. This is partially explained by an increase in the Fe-concentration in fcc crystallites.