Soft magnetic properties of Fe-TM-C-N (TM: Zr, Nb) films, fabricated by rf reactive sputtering in Ar+N-2 atmosphere, were investigated. The as-deposited films having mixed phases of amorphous and alpha-Fe or mostly crystalline alpha-Fe phase showed nanocrystalline structure upon annealing. The best soft magnetic properties achieved in these films are; H-c of 0.06 Oe, mu(eff) of 2750 (1MHz) and 4 pi M(s) of 16.8 kG in Fe-Zr-C-N film and H-c of 0.31 Oe, mu(eff) of 2100 (1MHz) and 4 pi M(s) of 15.5 kG in Fe-Nb-C-N film. The fine grained alpha-Fe structure, together with very fine TM(C,N) precipitates which were formed at an early stage of crystallization, is considered to be one of the main factors for the excellent soft magnetic properties. The Fe-Zr-C-N films exhibit better soft magnetic properties than those of the Fe-Nb-C-N films, which is considered to be due to the magnitude of the formation enthalpy.