Nanocrystalline soft magnetic alloy powders are promising microwave absorbents since they can work at diverse frequencies and are stable in harsh environments. However, when the alloy powders are in austenite phase, they are out of the screen for microwave absorbents due to their paramagnetic nature. In this work, we reported a strategy to enable strong microwave absorption in nanocrystalline austenite FeCoCr powders by deformation-thermal co-induced ferromagnetism via attritor ball milling and subsequent heat treatment. Results showed that significant austenite-to-martensite transformation in the FeCoCr powders was achieved during ball milling, along with the increase in shape anisotropy from spherical to flaky. The saturation magnetization followed parabolic kinetics during ball milling and rose from 1.43 to 109.92 emu/g after milling for 4 h, while it exhibited a rapid increase to 181.58 emu/g after subsequent heat treatment at 500 °C. A considerable increase in complex permeability and hence magnetic loss capability was obtained. With appropriate modulation of complex permittivity, the resultant absorbents showed a reflection loss of below −6 dB over 8~18 GHz at thickness of 1 mm and superior stability at 300 °C. Our strategy can broaden the material selection for microwave absorbents by involving Fe-based austenite alloys and simply recover the ferromagnetism of industrial products made without proper control of the crystalline phase.