[Display omitted] • 0.3 at.% Dy addition can completely suppress the surface crystallization. • Origin and formation mechanism of surface crystallization is explained. • Crystallization suppressed mechanism from the electronic structure is revealed. The heterogeneous crystallization on free layer of amorphous precursor seriously deteriorates the magnetic softness of the nanocrystalline alloys, and its origin of formation mechanism remains unclear. Here we have found that impurity Mn exists on free layer in a 24 μm thick Dy-free Fe 76 Si 13 B 8 Nb 2 Cu 1 alloy prepared with industrial raw materials. Addition with ultralow 0.3 at. % Dy reduces the content of Mn, S and O in the melt-spun ribbons, decreases core level binding energy, and lowers Fermi level N (E F) of the alloy. Therefore, the surface crystallization is suppressed and the magnetic softness is improved, which is comparable to that of the Dy-free alloy made with high purity raw materials. This finding provides a solution for inhibiting surface crystallization and improving product quality in the industrial production of nanocrystalline alloys. [ABSTRACT FROM AUTHOR]