In this research mixtures of barium ferrite and graphite with different molar ratios were mixed and milled in a planetary ball mill to produce a BaFe12O19/Fe3O4 nano-composite. Some of the milled samples were then heat treated at 750 and 850 degrees C under vacuum to synthesize BaFe12O19/Fe/Fe3O4 composite. The effects of graphite content in the mixtures (C:O molar ratio of 0.9, 1 and 1.1), milling time and heat treatment on the characteristics of powder mixtures were investigated by XRD, VSM and TEM. XRD results showed that barium ferrite was partially reduced to Fe3O4 during milling. It was also found that increasing the C:O molar ratio from 0.9 to 1.1 accelerated the reduction process. The results showed that the magnetic properties of the milled and heat treated samples were altered by changing the C:O molar ratio. The saturation magnetization of BaFe12O19/Fe3O4 nano-composite formed in the 40 h milled sample with a C:O molar ratio of 0.9 was 27.86 emu/g. This value increased to 156.40 emu/g after heat treatment at 850 degrees C. Increasing the C:O molar ratio from 0.9 to 1.1 increased the saturation magnetization to 169.19 emu/g in the heat treated sample. The VSM results also showed that the coercivity of milled and heat treated samples is influenced by C:O molar ratio. The lowest coercivity value of 24.36 Oe was obtained in the sample milled for 40 h and then heat treated at 850 degrees C. This result is correlated well with the XRD results and confirmed mainly soft magnetic nature of the produced nano-composite.