In this work, the nanoindentation‐induced deformation behavior in sintered Fe36Ni is investigated using experiments and molecular dynamics simulations. The Fe36Ni alloy is synthesized through the powder metallurgy route. A microstructural study of the sintered sample reveals the formation of both hard α‐(Fe, Ni) and soft γ‐(Ni, Fe) phases due to compositional inhomogeneity, and increasing the sintering temperature enhances the γ‐(Ni, Fe) phase formation. The experimentally measured nanoindentation features are correlated to atomistic origin using molecular dynamics simulation. Deformation behavior is explored using local shear strain and atomic displacement plot, and a detailed investigation of various dislocation nucleation and their interaction is performed to gain insights into the mechanisms governing plastic deformation. The plastic deformation of α‐(Fe, Ni) phase is governed by dislocation with Burger's vector b = ½ <111> and b = <100> whereas, sessile dislocations such as Stair‐rod (b = 1/6 <110>), Frank (b = 1/3 <111>), and Hirth lock (b = 1/3 <100>) are found to be responsible for the plastic deformation and also contribute in strain hardening of γ‐(Ni, Fe) phase.