We have employed the pulsed filtered vacuum arc deposition technique to prepare Co-C and Fe-C nanocomposite films of various carbon compositions. Thermal annealing was performed in vacuum at various temperatures. Characterization of the as-deposited and annealed films was performed using various techniques including x-ray photoelectron spectroscopy, transmission electron microscopy (TEM), atomic force microscopy (AFM), magnetic force microscopy (MFM) and magnetic measurements. The TEM results showed that the as-deposited Co-C films generally consist of amorphous Co nanograins of several nanometer in size encapsulated by amorphous carbon. After annealing, the Co grains become crystallized and were encapsulated by graphite carbon. Depending on the composition and annealing conditions, these films show very different magnetic properties. Superparamagnetism was observed in some of these films. For a sample with a composition of Co_<36>C_<64> the blocking temperature was determined to be 12K. Soft ferromagnetic properties with a coercivity of 2 or 3 Oe were observed for the as-deposited low Co composition films and they become magnetically harder after annealing. The domain structures of these Co-C and Fe-C films were observed by MFM and they showed different features.