Abstract Soft magnetic composites (SMCs), which are used in electromagnetic applications, can be described as ferromagnetic powder particles surrounded by an electrical insulating film. SMC components are normally manufactured by conventional PM compaction combined with new techniques, such as two step compaction, warm compaction, multi-step and magnetic annealing followed by a heat treatment at relatively low temperature. These composite materials offer several advantages over traditional laminated steel cores in most applications. The unique properties include three-dimensional (3D) isotropic ferromagnetic behavior, very low eddy current loss, relatively low total core loss at medium and high frequencies, possibilities for improved thermal characteristics, flexible machine design and assembly and a prospect for greatly reduced weight and production costs. With expanded applications of soft magnetic composite materials expected in the future, a review of the magnetic properties, characteristics, processing and applications of SMCs is presented in this article.