The outstanding mechanical strength of as‐deposited DC‐electrodeposited nanocrystalline (nc) Ni‐Fe alloys has been the subject of numerous researches in view of their scientific and practical interest. However, recent studies have reported a dramatic drop in ductility upon annealing above 350°C, associated with a concomitant abnormal rapid grain growth. The inherent cause has been ascribed to the presence of a detrimental product or by product in the bath, which affects either the microstructure or causes defects in the concentration and/or distribution of the as‐deposited films. The present work has been inspired by the observed abnormal behaviour of annealed electrodeposited nc Ni‐Fe alloy, which has here been addressed by considering the relationship between the composition of the bath (iron‐chloride, nickel‐sulphate solution, saccharin and ascorbic acid) and deposition defects (e.g. grain boundary pores) in the case of an nc Ni‐Fe (Fe 48 wt%) alloy. The current investigations have included X‐ray photoelectron spectroscopy (XPS), field emission scanning electron microscopy (FESEM) and transmission electron microscopy (TEM) in both as‐deposited and post‐annealed conditions (300°C–400°C). XPS depth profiling with Ar ion sputtering showed a significant amount of C and O impurities entrapped in the foils during deposition. As such impurities are often overlooked in common analytical techniques, new scenarios may need to be rationalised to explain the observed drop in tensile ductility of the as‐deposited Ni‐Fe alloys.