We present an ab initio theoretical formalism for investigating the onset of magnetic order in strongly-correlated electron systems. The formalism is based on spin density functional theory, with a self-interaction corrected local density approximation (SIC-LDA). The self-interaction correction is implemented locally, within the KKR multiple-scattering method. Thermally induced magnetic fluctuations are treated using a mean-field ‘disordered local moment’ (DLM) approach and we use a linear response technique to generate the paramagnetic spin susceptibility. We apply the formalism to the heavy rare earth metals, where the magnetic ordering tendencies are analysed in terms of the underlying electronic structure. The formation of incommensurate magnetic structures is shown to be promoted through a Fermi surface nesting mechanism. Our calculations yield an accurate, parameter free, estimate of the magnetic ordering temperature of gadolinium. Using this element as a magnetic prototype, we propose a ‘unified phase diagram’, from which the magnetic ordering tendencies of any heavy rare earth system can be found. This diagram is used to predict critical alloy concentrations, at which new magnetic phases appears. We also examine magnetic ordering in transition metal oxides and outline how our first principles linear response approach can be adapted to study compositional correlations, which we illustrate by investigating the presence of atomic short range order in gadolinium-yttrium alloys.