Developing graded microstructure and mechanical properties is critical for accelerating the design and optimization of structural materials for a wide range of applications. In this study, Fe-Cr alloys were fabricated by spark plasma sintering (SPS) technique. The microstructure, microhardness, and tensile properties of the as-fabricated and thermally annealed variants were investigated. Graded grain structures were created in the as-fabricated cylinders along both axial and radial directions. Grain size was gradually reduced from the sample periphery to the center. Microhardness measurements reveal a gradual decrease of hardness towards the periphery of the samples. The as-fabricated Fe-Cr alloys show a desired combination of tensile strength and elongation, primarily due to the formation of a high density of oxides, voids, dislocations, and grain boundaries. After in-situ thermal annealing at 600 °C under 60 MPa for 2 h using SPS, the Fe-Cr alloys underwent minimal grain growth, and the graded grain structures were retained. The hardness was more uniformly distributed in the annealed variants, and the tensile strength was reduced with an increase in the total elongation, which is attributed to the dissolution of nano-sized oxide particles and the relief of the residual stress. This study demonstrates that SPS coupled with subsequent heat treatment can tailor the graded microstructure and control the mechanical properties of Fe-Cr alloys, showing potential applications in other alloy systems.