In this article, the structural, magnetic, and microscopic properties of exchange-coupled TbFe/Fe/TbFe system are presented. Both TbFe layers exhibit out-of-plane magnetization, and Fe spacer layer (SF) has in-plane magnetization, whereas the entire exchange-coupled system shows considerable enhancement in magnetic properties. By increasing the thickness of SF from 2 to 20 nm, the out-of-plane coercive field and saturation magnetization get enhanced by more than thrice. Perpendicular anisotropy gets tailored as the thickness of SF increases, which also affects the microscopic magnetic domains. Maze-like magnetic domains have been observed at SF = 2 nm; however, domains get diffused and agglomerated upon further increment in thickness of SF . In addition, tilt in effective anisotropy has been achieved in the presence of SF , which is also verified using micromagnetic modeling. The results obtained in TbFe/Fe/TbFe exchange-coupled systems have the potential to be used in magnetic storage technology for hard disk drives. © 2023, The Author(s), under exclusive licence to Springer-Verlag GmbH, DE part of Springer Nature.