The microstructural evolution of drop-tube processed Al-4.1wt% Fe-1.9 wt% Si alloy powders has been analysed. X-ray diffraction shows that, irrespective of the cooling rate, the only intermetallic formed is Al8Fe2Si. Microstructural analysis reveals that the larger powders (d > 300 µm) comprise a mixed microstructure comprising microcellular and dendritic regions with a lamellar interdendritic eutectic. Smaller powders tend to also contain one or more featureless faceted regions, the prevalence of which increases with decreasing sample size. In the smallest powder sizes (d < 106 µm), propeller-like structures with either 3-or 4-arms were observed to be formed from the same featureless material due to a change in the growth mechanism from faceted to continuous. The Fe content of the featureless material was found to be same as the melt, while the Si content was measured as 1 wt% Si. TEM analysis reveals that this "featureless" material comprises clusters of nano-sized faceted Al8Fe2Si crystals in an α-Al matrix. It seems likely that this material formed as a result of partitionless solidification with respect to Fe, with the resulting highly supersaturated solid-solution subsequently undergoing decomposition forming nano-crystalline Al8Fe2Si. The microhardness of the samples increased from 72 HV0.01 to 90 HV0.01 as the sample size was decreased from 850 µm to 150 µm but later dropped from 90 HV0.01 to 80 HV0.01 for 150 µm to 53 µm samples, respectively. The nanohardness of angular region was measured as 1.76 ± 0.04 GPa, that of dendritic region was measured as 1.3 ± 0.09 GPa.