Annealing of crystalline multilayers composed of two miscible elements usually causes interfacial mixing of the constituent atoms, possibly leading to the formation of binary alloys at the interfaces. Magnetron sputtered c-Ni/a-Zr multilayers deposited at room temperature were vacuum annealed isochronally at 200 °C and 400 °C to observe thermal stability of the interfaces constituting the crystalline/amorphous multilayers. Control over the interfacial behaviour can aid the formation of materials with novel properties. The resultant changes in structural and magnetic properties of the multilayers were investigated in detail through X-ray Reflectivity, Polarized Neutron Reflectivity, SIMS and SQUID-based magnetization measurement techniques. The compositional variations in the amorphous mixed layers formed at the Ni-on-Zr and Zr-on-Ni interfaces due to atomic transport, were carefully observed as a function of annealing. Interface widths proceeded to increase with annealing at the expense of the Ni and Zr layers. The Ni-on-Zr interface was seen to be unstable at both temperatures; but the overall response of the interfaces to atomic diffusion was more pronounced when the multilayers were annealed at 400 °C. Under conditions of supersaturation of atoms within restricted spaces of the interfacial layers and the limited availability of components within the multilayer, unexpected demixing effects were observed at both the interfaces. A large increase in magnetic moment obtained after annealing at 400 °C, was attributed to the high densification of the Ni layers as well as to the incorporation of Ni crystallites into the Zr-on-Ni interface layers.