We investigated annealing effect of microforged powders on magnetic properties and electromagnetic absorption behaviors for ferromagnetic Fe-Cr metal alloy powder-polymer composites. The coercive properties greatly decreased with annealing temperature and the magnetic permeability had significantly increased after microforging and subsequent annealing treatment, due to a reduction in lattice strain of the microforged powders. The power loss in the far field regime also had greatly increased after microforging and subsequent annealing treatment in frequency range from 50 MHz to 6 GHz. As a result, the electromagnetic absorption of ferromagnetic Fe-Cr alloy metal powder-polymer composites was highly improved because of the relaxation of the internal strain during annealing process.