Observations of thin films of amorphous TbFeCo by electron microscopy with a resolution limit of better than 0.2 nm invariably reveal the presence of very fine microcrystals (sizes ∼2–5 nm). Bright field imaging, in both plan view and in cross section, indicates that these nanocrystals have the crystal structure of &agr;‐Fe or Co. In contrast, crystals of Tb metal (or Tb oxides) have not been observed. Similar observations of FeCo thin films, prepared under identical experimental conditions, reveal much larger crystals (typically 10–50 nm). It is concluded that the presence of the rare earth element Tb is crucial to the microstructure displayed by this kind of material.