The addition of 2.5 at% Si or Al to Fe_2Tb causes the formation of an amorphous single phase and the glass formation range extends up to 15 at% Si or Al which is the maximum additional amount in the present study. The amorphous (Fe_2Tb)_M_ (M=Si or Al) alloys crystallize through two stages consisting of Am→Fe_2Tb+Am→Fe_2Tb+unknown compound. The Fe_2Tb phase in coexistent with the amorphous phase has a very fine spherical morphology with a particle size of 5 to 20 nm. The additional Si or Al element is enriched into the unknown compounds. The coexistent state of the nanocrystalline Fe_2Tb and amorphous phases extends over the temperature region of about 300 K because of the high thermal stability of the remaining amorphous phase. The high thermal stability of the amorphous phase and the formation of the nanoscale Fe_2Tb grains are presumably due to the necessity of the redistribution of Si or Al into the remaining amorphous phase. The best magnetostrictive properties of high σ_, low H_c, high λ_s and high λ/H were obtained in the coexistent nanocrystalline Fe_2Tb and amorphous phases and the phase transition into Fe_2Tb and unknown compounds caused the depression of the magnetostrictive properties