HREM and FEG TEM were emphasized and extensively used to follow the most subtle changes in the structure and composition of ball‐milled Cu, Fe‐Cu, and thermally decomposed Fe60Cu40. Some significant results are obtained and summarized as follows: HREM shows that the deformation of ball‐milled copper proceeds mainly by twinning and shear bands (SBs) formation. The nano‐grains formed during ball milling (BM) contain a high density of dislocations. The grain boundaries (GBs) of nanocrystalline (NC) Cu prepared by BM are ordered, curved, and strained, but disordering, lattice distortion, and nanovoids in local regions were frequently observed. Nanoscale composition analysis on mechanically alloyed Fe16Cu84 shows that the average Fe content in both the interior of grains and the GBs is close to the designed composition, which proves that a supersaturated solid solution has really formed. However, the Fe content is rather inhomogeneous between the larger and smaller grains, which infers the inhomogeneous mixing of Fe and Cu during mechanical alloying (MA). NC structure and the mechanical force‐enhanced fast diffusion are the reasons of the formation of supersaturated solid solutions in immiscible systems with positive enthalpy of mixing. HREM observations carried out with the thermally decomposed Fe60Cu40 solid solution show that the Nishiyama (N‐W) or Kurdyumov‐Sachs (K‐S) orientation relationships exist between α‐Fe and Cu. Energy dispersive X‐ray spectra (EDXS) results show that the Cu content in these α‐Fe grains reaches as high as 9.5 at.% even after heating to 1,400°C, which is even higher than the maximum solubility of Cu in γ‐Fe at 1,094°C. Microsc. Res. Tech. 40:101–121, 1998. © 1998 Wiley‐Liss, Inc.