Following the previous study on the effect of Nb addition in rapid-quenched (Nd,Dy)11.5Fe82.4-mNbmB6.1 permanent magnets on the magnetic properties, temperature characteristics and microstructure, the role of Dy addition in rapid-quenched Nd11.5-nDynFe81.4Nb1B6.1 (n＝0,0.5,1,1.5,2) permanent magnets has been investigated. It was found that Hci increases with increasing Dy content and the irreversible loss of magnetic flux decreases. Dy addition results in smaller grains and more homogeneous and regular grain structure. It is considered that Dy addition may enhance exchange coupling pining field and reduce the internal stray magnetic field. As a result, the irreversible loss of magnetic flux decreases notably and the magnetic properties at higher temperature are improved. Dy atoms on entering the main lattice of Nd9.5Dy2Fe81.4Nb1B6.1 alloy cause crystal lattice distorsion and affect the local structure of Fe atoms; however, Dy atoms have little influence of the local structure of Nd atoms.