In this study, a preparation route of Co–Cu alloys with soft magnetic properties by high-pressure torsion deformation is introduced. Nanocrystalline, supersaturated single-phase microstructures are obtained after deformation of Co–Cu alloys, which are prepared from an initial powder mixture with Co-contents above 70 wt.%. Isochronal annealing treatments up to 400 °C further reveal a remarkable microstructural stability. Only at 600 °C, the supersaturated phase decomposes into two fcc-phases. The coercivity, measured by SQUID as a function of annealing temperature, remains significantly below the value for bulk-Co in all states investigated. In order to understand the measured magnetic properties in detail, a quantitative analysis of the magnetic microstructure is carried out by magnetic force microscopy and correlated to the observed changes in coercivity. Our results show that the rising coercivity can be explained by a magnetic hardening effect occurring in context with spinodal decomposition.