In recent years, a lot of research has been done in the field of producing soft magnetic nano composites by means of mechanical alloying. These materials indicate more electrical resistance and permeability in comparison with soft magnetic composites (SMCs). In this research, reduction of silicothermal mixed powder (Nickel-oxide, Silicon and Iron) was carried out by mechanical alloying to form soft nano composites of FeSiNi/SiO2. Scanning Electron Microscopy (SEM) and X-Ray Diffraction (XRD) were used to detect physical characterization and finding the effect of milling time on micro structural properties. It is determined that initiation of forming the homogenous alloy was in 4 hour milling, increasing the time of milling to 40 hours caused decreasing grain size to 13 nm and formation of homogenous alloy. Magnetic properties of milled powder were studied by alternating gradient force magnetometer (AGFM) and it was observed that increasing milling time will cause improvement in soft magnetic properties (decreasing magnetic coercivity and increasing magnetic saturation). Manuscript profile