Yttria (Y) dispersed ferrum (Fe) films were prepared by a double-target magnetron co-sputtering method. Vacuum annealing and xenon ion irradiation were conducted to investigate the influence on the magnetic and mechanical properties of the films. The crystal grain growth mechanism and second phase precipitation mechanism were conducted simultaneously in the vacuum annealing process. These two effects led to an opposite variation of nano-hardness and coercivity in the films. Xenon ion irradiation played a role in rapid annealing, which also affected the magnetic performance of the yttria dispersed ferrum films. Yttria (Y) dispersed ferrum (Fe) films were prepared by a double-target magnetron co-sputtering method. Vacuum crystallization and xenon ion irradiation were conducted to investigate the influence on the magnetic and mechanical properties of the films. The crystal grain growth mechanism and second phase precipitation mechanism were conducted simultaneously in the vacuum annealing process. These two effects led to an opposite variation of nano-hardness and coercivity in the films. which also affected the magnetic performance of the yttria dispersed ferrum films.