Producing CoxFe100-x, where x is an integer from 20 to 95, nanoparticles by: (a) providing a first aqueous hydroxide solution; (b) preparing a second aqueous solution containing iron ions and cobalt ions; and (c) depositing measured volumes of the second aqueous solution into the first aqueous solution whereby coprecipitation yields CoFe alloy nanoparticles, wherein step (c) occurs in an essentially oxygen-free environment. The nanoparticles are annealed at ambient temperatures to yield soft nanoparticles with targeted particle size, saturation magnetization and coercivity. The chemical composition, crystal structure and homogeneity are controlled at the atomic level. The CoFe magnetic nanoparticles have Ms of 200-235 emu/g, (Hc) coercivity of 18 to 36 Oe and size range of 5-40 nm. The high magnetic moment CoFe nanoparticles can be employed in drug delivery, superior contrast agents for highly sensitive magnetic resonance imaging, magnetic immunoassay, magnetic labeling, waste water treatment, and magnetic separation.