The oxidation of Fe_73Si_16B_7Nb_3Cu_1 nanocrystalline powder has been conducted to investigate its influence on the electromagnetic wave absorption characteristics of the soft magnetic material. Oxidation occurred primarily on the surface of nanocrystals. Oxidation reduced the real part of complex permeability due to the reduction of the relative volume of the powder, which otherwise contributes to the permeability. Oxidation reduced the absorption efficiency of the sheet at frequencies over 1GHz, indicating that the relative contribution of skin depth increments to the absorption was not significant. The pulverization and milling process lowered the optimum crystallization temperature of the material by 40sim50°C because of the internal energy accumulated during the fragmentation and powder thinning processes.