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Structural inhomogeneity on length scales comparable to magnetic interaction lengths can produce complex magnetic behavior. Crystalline GdAl2 is a ferromagnet with a Curie temperature of 170 K, while amorphous GdAl2 thin films exhibit classic spin-glass behavior with a freezing temperature of 16 K. Nanostructured GdAl2, made by mechanically milling initially crystalline GdAl2, exhibits ferromagnetic and spin-glass-like transitions; however, the spin-glass-like transition occurs at a higher temperature than the freezing temperature of amorphous GdAl2 thin films. Curie–Weiss analysis suggests that the paramagnetic-to-ferromagnetic transition is due to the ferromagnetic ordering of small GdAl2 clusters and that the glassy transition is most likely due to spin-glass-like ordering of a surface/interface phase. ©2003 American Institute of Physics.