In this paper we describe studies on the low-temperature gaseous nitriding of epitaxial Ni-covered Fe layers. The epitaxial Ni/Fe bilayer system was grown by laser ablation deposition on an MgO͑001͒ substrate. Nitriding was done in an NH 3 ϩH 2 gas mixture in the 200°C-300°C temperature range. As a result of such nitriding, the main Fe-nitride phases could be produced as a pore-free material. The samples were analyzed by x-ray diffraction and conversion electron Mössbauer spectroscopy. It was observed that at the conditions applied the Fe-nitride phase formation occurs in the ␣→␣Ј, ␣Љ→␥Ј→→␥Љ,␥ٞ sequence, whereby each step is accompanied by grain refinement. The precise orientation relationships between the phases in the ␣→␣Ј, ␣Љ→␥Ј → sequence were determined. Based on the data obtained, a model is proposed that describes this transformation sequence on an atomic scale in terms of martensitic transition. Among other results, evidence is provided for two different types of orientation relationships that can occur between ␣-Fe and ␥Ј-Fe 4 N, depending on the prevailing conditions. The morphology of the Ni/Fe-N system is discussed.