Nanocomposites of FeCo and TiO2 with wide range of metal volume fractions (MVFs) were prepared by co-sputtering. High resolution transmission electron microscopy analysis reveals that the microstructure of the nanocomposites depends on the MVF which determines the particle size and separation. FeCo nanoparticles are amorphous at lower MVF whereas crystallites are present at higher MVF. Likewise, the magnetic characteristics of these films depend on the MVF. At low MVF, composite films exhibit superparamagnetism whereas at high MVF, coalescence of crystalline nanoparticles results in the opening up of hysteresis loop. These composite films show a considerable room temperature tunnel magnetoresistance and being proportional to the square of the normalized magnetization (M/M (s))(2).