An optimum route to fabricate the $A1_2O_3/Fe-Ni$ alloy nanocomposites with sound microstructure and enhanced mechanical properties as well as magnetism was investigated. To prepare homogeneous nanocomposite powders of Fe-Ni alloy and $Al_2O_3$, the solution-chemistry routes using $Al_2O_3 ; Ni(NO_3)_2{cdot}6H_2O$ and $Fe(NO_3)_3{cdot}9H_2O$ powders were applied. Microstructural observation of the powder mixture revealed that the Fe-Ni alloy particles of about 20 nm in size were homogeneously surrounded $A1_2O_3$, forming nanocomposite powder. The hot-pressed composite showed improved fracture toughness and magnetic response. These results suggest that the synergy materials with an improved mechanical properties and excellent functionality can be fabricated by controlled powder preparation and consolidation processing.