Nanoparticles of Ni_0.50Fe_0.50 and Ni_0.75Fe_0.25 alloys were prepared by chemical reduction in ethylene glycol medium. XRD and ⁵⁷Fe Mössbauer studies have confirmed the formation of Fe–Ni solid solution in nano-size dimensions with FCC structure. These samples consist of both ferromagnetic and paramagnetic domains which have been attributed to the coexistence of large and small particles as confirmed by atomic force microscopic (AFM) and ⁵⁷Fe Mössbauer spectroscopic studies. Improved extent of Fe–Fe exchange interaction existing in Ni_0.50Fe_0.50 alloy compared to Ni_0.75Fe_0.25 alloy explains the observed increase in the relative extent of ferromagnetic domains compared to paramagnetic domains in the former sample. Increase in the relative extent of ferromagnetic domains for hydrogenated alloys is due to increase in particle size brought about by the high temperature activation prior to hydrogenation.