Magnetic abrasive machining is one of the advanced finishing processes that produce a high level of surface quality of any type. The productivity of the finishing process and the quality of the treated surfaces are determined by magnetic and abrasive properties of the working media. To synthesize effective magneto abrasive composites with the size range of 1-100 mu m the intensive mechanical treatment of powdered mixtures of chemically inert (Fe:SiC, Fe:B4C and Fe:diamond) and exothermically reacting (Fe2O3:Fe:Me, Me = Al, Zr) systems in high-energy planetary ball mills is performed. It is shown that the formation of composites is the result of intensive processes of grinding and deformation (mechanical alloying) as well as of the mechanically intensified redox reactions (mechanochemical synthesis) leading to the formation of abrasive particles (MexOy) in iron matrix. X-ray diffraction, scanning electron microscopy, Mossbauer spectroscopy and investigations of mechanical properties accompanied by the measurements of the abrasive activity in the finishing process of the surface polishing are used for the characterization of the as-prepared composites. The main parameters and mechanisms of the formation of the optimal structure of composites are revealed. It is demonstrated that the smallest roughness of the machined surface (R-a similar to 1 nm) is achieved in the case of using the mechanically alloyed Fe/diamond composite and the mechanosynthesized Fe/ZrO2 composite.