<p>In this study, FeSi soft magnetic powders were used as raw materials, and the influence of particle size distribution on the microstructure and magnetic properties of their composites was systematically investigated. Six groups of FeSi powders with representative particle sizes (dP) of approximately 57.65&#xa0;μm, 29.93&#xa0;μm, 22.15&#xa0;μm, 18.61&#xa0;μm, 14.68&#xa0;μm, and 7.98&#xa0;μm (corresponding to D50 values) were used to prepare soft magnetic composites (SMCs) labeled as S1–S6 through phosphoric acid passivation and high-temperature annealing processes. Their microstructures, permeability, and loss characteristics were then analyzed. The results show that the density of SMCs gradually decreases with the decrease in FeSi powder representative particle size (dP), ranging from 79.28 for S1 to 43.41 for S6. However, the loss of SMCs decreases and then increases as dP decreases, reaching a minimum value of 237.75&#xa0;mW/cm³ at S5, followed by a slight increase to 290.84&#xa0;mW/cm³ at S6. Combined with the microstructural analysis of the SMCs, it was found that the grain boundary density is greater in the smaller dP powders, and the local inhomogeneities in the flux path are stronger, leading to an increase in eddy current losses. A comprehensive evaluation showed that the FeSi powder dP distribution plays a crucial role in optimizing the performance of SMCs, with sample S5 achieving an optimal balance between loss (176.34&#xa0;mW/cm³ at 100&#xa0;kHz and 50&#xa0;mT) and permeability (59.72), making it suitable for high-frequency and high-power electronic devices. The results of this study provide a theoretical basis and technical guidance for the design and application of high-performance soft magnetic composites.</p>