We report a new method of polyimide synthesis based on the interaction of dianhydrides with acylated diamines; for preparing a melt processable mixture of prepolymer and rare earth magnetic alloy particles in the form of 75-100 mum particles. This mixture can be easily converted to useful thermoplastic polyimide bonded magnets by heating at 300degreesC. It is shown that the prepolymer based on 1,3-bis(3,4-dicarboxyphenoxy)benzene dianhydride and the diacetyl derivative of 2,2-bis(4-(4-aminophenoxy)phenyl)sulfone diamine after removing less than 5% by weight of the volatile components can be melted at 220-240degreesC to give a fluid with a viscosity of 10-20 Pas. This low viscosity of the prepolymer facilitates blending it with magnetic particles at relatively high volume fractions (up to 85 vol %) that are not possible using conventional methods. The resulting polyimide-bonded magnets exhibit excellent thermal stability and a high storage modulus of 10 GPa at 400degreesC. Magnetic property measurements showed a greater than or equal to10% increase in energy products over that of typical commercial bonded magnet materials such as the ones containing thermoplastic poly(phenylene sulfide) or polyamide matrices. (C) 2003 Wiley Periodicals, Inc.