Mechanically processing iron powder with interstitial and substitutional elements resulted in different microstructures (grain size, rms-strains, and phases) depending upon the alloying composition. Alloying iron powder with substitutional elements (approximately 4 at% Al, Cr, Nb, and Ti) resulted in a microstructure similar to mechanically processed iron powder: grain size ≈7nm, local, rms strain ≈0.5%, and bcc-Fe nanograins. Small reductions in grain size and increase in rms strain occurred with increasing radius of the substitute alloy atoms. Substitutional atoms were not uniformly distributed throughout the bcc-Fe matrix, but were distributed in clusters within the nanosgrains and/or as a thin coating on the grain boundaries. Alloying iron powder with interstitial elements (4–8 at% C and N) resulted in significantly different microstructures: decrease in grain size and increase in rms-strain occurred with inceasing the interstitial concentration and a bct-Fe nanograin phase developed. Interstitial atoms were also predominately distributed in clusters and/ or in a thin region along or in the grain boundaries of the iron nanograins.