In the present work, the microstructure and its effect on the magnetic, magnetocaloric, and magnetoelastic properties of the Tb55Co30Fe15 melt-spun ribbon were investigated. The ribbon exhibits typical amorphous characteristics in its X-ray diffraction examination and differential scanning calorimetry measurement. However, the magnetic properties of the ribbon indicate that the ribbon is inhomogeneous in the nanoscale, as ascertained by a high-resolution electron microscope. Compared to the Tb55Co45 amorphous alloy, the Tb55Co30Fe15 ribbon shows poor magnetocaloric properties but outstanding magnetostriction. A rather high value of reversible magnetostriction up to 788 ppm under 5 T was obtained. The mechanism for the formation of nanoparticles and its effect on the magnetocaloric and magnetostrictive properties were investigated.