Fe73.5Si13.5Cu1Nb3B9 and Fe77.2Si11.2Cu0.8Nb3.3B 7.5 nanocomposite materials consisting of nanocrystalline phase in an amorphous matrix were obtained by heat-treatment of their precursor amorphous ribbons. The influence of structural modifications induced during the heat-treatment on soft magnetic properties and magnetoimpedance (MI) effect have been studied. The structural investigations on both these ribbons revealed the presence of two phases, fine grained Fe3Si phase and a residual amorphous phase on heat-treatment. The maximum MI ratio obtained in the present study is 95 at f 4 MHz, for the optimized heat-treated Fe77.2Si 11.2Cu0.8Nb3.3B7.5 ribbon. This is ascribed to the increase in magnetic permeability and decrease in coercive force and intrinsic resistivity. Moreover, a maximum magnetic field sensitivity (ζ) of 8.3/Oe at f 2.5 MHz is obtained, for the optimized nanocrystalline Fe73.5Si13.5Cu1Nb3B9 ribbon. This suggests that tailoring of the nanocrystalline microstructures induced by optimum heat-treatment conditions can result in obtaining excellent combinations of the magnetic permeability and resistivity. Our results indicate that these Fe-based nanocrystalline materials can be ideally used for low magnetic field and high frequency sensor applications. © 2011 American Institute of Physics.