This paper describes the applicability of a modified polyol process in conjunction with a transmetallation reaction in synthesis of Co y Ag 100¡y nanocrystallites of a core-shell structure. The substitution Co ! Ag is varied as 20 y 95 by tuning the microstructure with functional magnetic and giant magneto resistance properties. The existence of core-shell structures was confirmed through transmission electron microscope and the size of Co-core increased from 8 to 50 nm with decrease in Ag-content of the sample. The magnetic behaviour of the sample changed from a pseudo-superparamagnetic nature to ferromagnetic with increase in Co-core size. Normalised saturation magnetisation values increased from 89.5 to 128.6 emu/g with increase in size of Co-core; however, none of the ferromagnetic samples exhibited any magneto resistance (MR). A value of 2.0% MR was observed in case of Co 20.6 Ag 79.4 which increased to a maximum of 3.6% MR for Co 36.6 Ag 63.4 sample when measured at 5 K.