•The low-oxygen induction thermal plasma (LO-ITP) process was developed.•Both stable and metastable phases of anisotropic Nd-Fe ultrafine particles were prepared.•Numerical calculations clarify the alloying mechanism during rapid cooling wherein Nd-Fe vapor solidifies.•The LO-ITP process paves the way to achieve a new-generation anisotropic permanent magnet. Display omitted Both stable Th2Zn17-type and metastable TbCu7-type phases of anisotropic Nd-Fe ultrafine particles are prepared selectively by controlling the cooling rate using the low-oxygen induction thermal plasma (LO-ITP) process. The cooling rate is controlled by introducing the additional Ar gas at the end of the plasma flame. Moreover, numerical calculations based on a binary aerosol formation-growth model clarifies the alloying mechanism during rapid cooling wherein Nd-Fe vapor solidifies. The metastable Nd-Fe alloy ultrafine particle is formed in the cooling rate of 5 × 105 K/sec via the alloy droplet which is formed after the Fe and Nd vapors convert simultaneously into the liquid phase. The mean particle sizes of obtained ultrafine alloy powders without and with quenching are 76.3 ± 24.2 nm and 37.0 ± 12.5 nm, respectively. Electron microscopy observation reveals that the obtained particles are single crystalline. The Nd concentration of Nd-Fe particles shows a distribution in the range of 10.1–12.6 at%. X-ray diffraction and magnetic measurement demonstrate that the obtained particles are anisotropic and can be aligned by external magnetic field. Therefore, this process paves the way to achieve a new-generation anisotropic permanent magnet.