To easily produce a thin sheet of an Fe-Co alloy containing 20 to 60% Co or an Fe-Co-M alloy containing 20 to 60% Co and ≤5% M (V, Ta, Nb, Mo, W or Ti) by a powder metallurgy method using prealloy powder.

The following stages are performed: (A) a powder production stage where the molten metal of the above magnetic alloy is subjected to water atomizing to obtain powder having a grain size of ≤250 μm and apparent density of ≤3.3 g/cm3; (B) a powder rolling stage where the powder is compacted into a thin sheet having a thickness of 0.05 to 0.8 mm by a powder rolling method; (C) a primary sintering stage where the thin sheet is sintered at 950 to <1,400°C; (D) a cold rolling stage where the thin sheet is cold-rolled into a prescribed sheet thickness, and further, micropores left in the sintering are crushed to destroy an oxidation film in the former powder boundary; (E) a second sintering stage where the thin sheet is heated at 1,150 to <1,400°C in a nonoxidizing atmosphere to promote its densification; and (F) a finish rolling stage where the thin sheet is subjected to skin-pass rolling at a draft of 0.5 to 10% into a thin sheet having a prescribed sheet thickness in the range of 0.05 to 0.5 mm, and in which the area ratio of micropores is ≤1%.