The importance of newly developed permanent magnetic materials in many electromechanical, magnetomechanical and electronic applications is attributed to the drastic improvement in microstructure related properties, such as the remanence, the magnetic energy density product and the coercive field. The influence of the microstructure on the magnetic properties of the magnets will be discussed, where special emphasis is laid on rare earth permanent magnets. Highest performance, anisotropic Nd-Fe-B magnets with J r > 1.5 T, (B H) max > 450 kJ m −3 and J H c > 750 kA m −1 , which are produced by the powder metallurgy route, show a strong influence of composition and processing parameters on the magnetic properties. The magnetic properties of Sm(Co, Cu, Fe, Zr) z sintered magnets, which are used nowadays for high temperature applications between 300 and 500 • C, are determined by the cellular precipitation microstructure, which is developed during a complex heat treatment and by the microchemistry. Special hard magnetic powder materials, such as Sm 2 Fe 17 N 3 and nanocrystalline, composite Nd 2 Fe 14 B/(α-Fe, Fe 3 B) materials have been developed especially for usage in bonded magnetic materials, which show the strongest annual increase in the production of permanent magnets. The phenomenon of the enhancement of remanence, occurring in single phase and composite Nd 2 Fe 14 B based magnets with isotropic grain alignment, is attributed to intergrain exchange interactions.