Magnetic hysteresis properties were measured on dispersed synthetic milled titanomagnetite (Fe2.3Ti0.7O4) particles in the range 1--125 &mgr;m and after annealing. Milling is thought to introduce internal stresses in the particles by increasing the dislocation density that is reduced again by annealing. Thus, it was intended to investigate the stress-dependence of magnetic parameters. The particles were examined by mineralogical and crystallographic methods in the milled state and after annealing. Small particles (1--2 &mgr;m) were very inhomogeneous after milling with anisotropic strains and a crystallite size of ≈50 nm as found from X-ray line broadening; annealing led to increased crystallite size but hardly reduced strains. For larger grains, an outer ≈1 &mgr;m thick 'damaged' shell was detected that could be removed by etching or recrystallized by annealing. After these procedures, particles showed reduced coercive force and reduced relative saturation remanent magnetization. The two-shell behaviour of milled 10--15 &mgr;m particles could be seen from wasp-waisted hysteresis curves that disappeared after etching or annealing. For larger particles these effects were reduced. ¿ American Geophysical Union 1996