A new approach for obtaining Fe-based magnetic nanocrystalline phases in a paramagnetic Ag matrix is presented. Ag85Sm15 alloys were obtained by the single-roll melt-spinning method. The Ag-Sm ribbons were ball-milled together with fine-grained Fe powder in a RETSCH-4000 high-energy ball-mill for more than 80 hours. The diffusion of Fe into the Ag-based matrix is almost complete after approx. 50 hours. The evolution of the resulting Ag-Sm-Fe solid solution vs. the milling time was monitored by synchrotron radiation powder diffraction and by Mossbauer spectroscopy.