In this paper, we perform concurrent atomistic–continuum (CAC) simulations to assess the contribution of the internal stress induced by the microscale dislocation pileup at an atomically structured interface to the atomic-scale phase transformations (PTs), reverse PTs, and twinning. The main novelty of this work is to unify the atomistic description of the interface and the coarse-grained (CG) description of the lagging dislocations away from the interface within one single framework. Our major findings are: (a) the interface dynamically responds to a pileup by forming steps/ledges, the height of which is proportional to the number of dislocations arriving at the interface; (b) the pileup-induced internal stress concentration profile follows neither the classical Eshelby model nor the super-dislocation model alone, but a combination of them; (c) when the pre-sheared sample is compressed, a direct square-to-hexagonal PT occurs ahead of the pileup tip and eventually grows into a wedge shape. The two variants of the hexagonal phases form a twin with respect to each other; (d) upon a further increase of the loading, part of the newly formed hexagonal phase transforms back to the square phase. The square product phase resulting from this reverse PT forms a twin with respect to the initial square phase. All phase boundaries (PBs) and twin boundaries (TBs) are stationary and correspond to zero thermodynamic Eshelby driving forces; and (e) the microscale dislocation pileup-induced internal shear stress and the structural change at the atomic-scale interface reduces the stress required for initiating a PT by a factor of 5.5, comparing with that in the sample containing no dislocations. This work is the first characterization of the behavior of PTs/twinning resulting from the reaction between a microscale dislocation slip and an atomically structured interface. The gained knowledge will advance our understanding of how the multi-phase material behaves in many complex physical processes, such as the synthesis of multi-phase high-entropy alloys or superhard ceramics under high-pressure torsion, deep mantle earthquakes in geophysics, and so on, which all involve dislocation slip, PTs, twinning, and their interactions across from the atomistic to the microscale and beyond.