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The structural and magnetic properties of Co:C nanocomposite films at room temperature were investigated as functions of annealing temperature, Co concentration, and film thickness. The as-deposited films, which were cosputtered from Co and C onto water-cooled glass substrates, are nonmagnetic amorphous Co–C alloys. Hexagonal-close-packed (hcp) Co grains are formed in 100 nm films annealed at 300 °C and most Co takes this structure when annealed at higher temperatures. The sizes of the Co grains range from 10 to 25 nm, with larger grain size resulting from higher annealing temperature and higher Co concentration. With the increase of annealing temperature and Co concentration, the magnetic activation or switching volumes increase faster than the physical grain volumes, suggesting the increased exchange coupling between neighboring Co grains. The films with high coercivities have optimal combinations of large grain size and weak intergrain exchange coupling before a network-like structure is formed and the percolation threshold is reached. Coercivities of about 800 Oe were obtained in 100 nm films with annealing temperature of 400 °C and Co concentration of 60 at. %. Higher coercivities, up to 1030 Oe, were obtained in films with reduced thickness and elevated annealing temperature.