Particles of iron and nickel are added to a flowing plasma stream which does not chemically alter the iron or nickel. The iron and nickel are heated and vaporized in the stream, and then a cryogenic fluid is added to the stream to rapidly cause the formation of nanometer size particles of iron and nickel. The particles are separated from the stream. The particles are preferably formed as single crystals in which the iron and nickel atoms are organized in a tetragonal L10 crystal structure which displays magnetic anisotropy. A minor portion of an additive, such as titanium, vanadium, aluminum, boron, carbon, phosphorous, or sulfur, may be added to the plasma stream with the iron and nickel to enhance formation of the desired crystal structure.